20221003-招银国际-Fixed_Income_Daily_Market_Update_6页_962kb

CMBI Credit Commentary Summary

Core Content Overview

This document is a Fixed Income Daily Market Update by the Fixed Income Department of CMB International Global Markets Limited. It provides insights into recent market movements, economic indicators, and macroeconomic news, particularly focusing on the China market and offshore Asia. The report includes trading desk comments, analyst views, top movers, and important disclosures.

Main Market Observations

• Market Activity: The market was muted as Chinese onshore buyers were absent for the week.

  • China HY showed short-covering and COGARDs/CIFIHGs were marked 1-3pts higher in the morning.
  • SOE Perps/AT1s/T2s were unchanged by mid-day.
  • T2s were relatively muted, with RM selling to raise cash.
  • TMT sector was mixed, with BIDU/TENCNT/MEITUA tightening 2-10bps and BABA widening 5bps.

• Top Movers:

  • COGARDs were broadly bounced by 4-8pts due to short covering.
    • COGARD 6.15% '25 was notably bid up 16pts by short dealers and traded back at 45 level.
  • FTLNHDs, FUTLANs, and GRNLGRs saw declines.
    • FTLNHD 6.8% '23 dropped 4.0pts.
    • FUTLAN 6% '24 fell 3.0pts.
    • GRNLGR 6.75% '23 decreased 2.8pts.

• LGFVs and SOE Perps:

  • The LGFV/SOE Perp spaces were quiet at the end of the quarter.
  • SOE Perps were mixed with some support from Chinese NBRM and some selling due to RM trimming.
  • LGFVs saw heavy selling due to lack of onshore buyers and global RM trimming positions.

China Economic Outlook

• GDP Growth Forecast:

  • 2022: Maintained at 3.5%
  • 2023: Maintained at 6%

• PMI Data:

  • Manufacturing PMI: Mildly rebounded from 49.4% to 50.1% in September.
    • Sectors like food, beverage, medicine, steel, and general equipment showed significant improvement.
  • Construction PMI: Significantly improved from 56.5% to 60.2%, indicating policy support for infrastructure.
    • However, the new order index dropped to 51.8%, suggesting a potential slowdown in new project starts.
  • Service PMI: Notably declined from 51.9% to 48.9%, driven by stricter zero-Covid policy.
    • Retail, air transport, accommodation, catering, and maintenance services were most affected, with PMIs below 45%.
  • Exports Order Index dropped from 48.1% to 47%, while import index slightly increased to 48.1%.

• Inflation and Cost Pressure:

  • Material cost index rose sharply to 51.3% in September.
  • Ex-factory price index for manufacturing increased to 47.1%, still below 50%.
  • Service ex-factory price index remained weak at 47.5%.

• Employment:

  • Employment indexes in manufacturing, construction, and service sectors were 49%, 48.3%, and 46.3%, respectively, indicating continued employment pressure.

Recent Developments

• Onshore Primary Issuances:

  • 36 credit bonds were issued last Friday, totaling RMB19bn.
  • Month-to-date issuance reached RMB1505bn, a 2.1% yoy decrease.

• Key Issuer Actions:

  • Jiangning Jingkai Overseas Investment Co., Ltd. extended financing arrangements of RMB23bn.
  • China SCE paid USD8.9mn coupon on CHINSC 5.95% '24.
  • S&P downgraded CIFI Holdings to B+ and placed on CreditWatch.
  • Moody's placed Fosun on review for downgrade.
  • Seazen Holdings canceled cRMB500mn 20Xinkong03 bonds.
  • China Huarong announced repurchase of some USD bonds and SGD bonds.
  • KWG Group completed exchange offer and consent solicitation for USD7.875% '23 notes.
  • Modern Land anticipates restructuring by 7 Oct.
  • Sunac remitted RMB4bn 10% installment for PRRongchuang01.
  • Yida China failed to pay USD3.45mn related to YIDCHL 6.0% '25.

Macro News Highlights

• U.S. Markets:
  • S&P, Dow, and Nasdaq all saw declines in September.
  • The Fed maintained higher interest rates to control inflation.
  • Treasury yields rose, with 2/5/10/30-year yields at 4.22%/4.06%/3.83%/3.79%, respectively.
  • The yield curve bear steepened.

Important Disclosures

• The report is not investment advice and is intended for informational purposes only.
• CMBIGM is not liable for any losses or damages resulting from reliance on the report.
• The information is subject to change and is based on publicly available data.
• The report is only for specific investors, including major US institutional investors, Accredited Investors, and High Net Worth Companies in the UK and Singapore.
• Conflicts of interest may exist, as CMBIGM may have investment positions in the mentioned companies.

Author Certification

• The author certifies that the views expressed accurately reflect their personal views.
• The author has no financial interest in the companies covered in the report.
• The author has not traded in the stocks covered in the 30 days prior to the report's publication and will not trade within 3 business days after publication.

Summary

This report offers a comprehensive analysis of the fixed income market, China economic performance, and macroeconomic trends, with a focus on liquidity, policy impacts, and sectoral movements. It highlights the weakness in growth and service sector PMI, the mixed performance of TMT and property sectors, and the behavior of RM and NBRM in the market. The top movers and issuer actions are also detailed, along with important disclosures and author certifications to ensure transparency and compliance.