20260317-招银国际-Fixed_Income_Daily_Market_Update_7页_726kb

CMBI Credit Commentary Summary

Core Content

This document is a Fixed Income Daily Market Update from the CMBI Credit Commentary. It provides an overview of the fixed income market performance, macroeconomic outlook for China, and detailed analysis of specific bonds and companies. The report is authored by Glenn Ko, CFA, and includes contributions from Cyrena Ng, CPA and Yujing Zhang.

Market Performance Overview

Fixed Income Highlights

• JP Long-end Insurance Subs: Better buying activity, with SOFTBK 61-65 up by 0.7pt.
• Yankee Bonds: Better selling, but prices remained stable.
• GLPCHI 29/SMCGL 8.375 Perp: Lost 0.6pt.
• ZHOSHK 28: Dropped 2.7pts yesterday due to a profit warning, but unchanged this morning.
• WESCHI 28-29: Down by 0.2-0.4pt.
• HK Market: The NWDEVVL/VDNWDL complex lost 0.1-0.7pt. The Town Planning Board rejected NWD's K11 Artus hotel conversion to flats.
• FAEACO 12.814 Perp/LIFUNGs: Down by 0.2-0.6pt.
• LASUDE 26: Down by 0.1pt.
• VLLPM 27: Up by 1.4pts.
• ACPM 4.85 Perp/GARUDA 31: Down by 0.9-1.1pts.
• LGFV Bonds: Remained immune to macro volatility.
• Middle East: Long-end KSA/ARAMCO lost up to 0.5pt. Bank front-end papers and FRNs (FABUH/DIBUH) saw additional selling.

Key Bonds and Companies

ZHOSHK 5.98 01/30/28

• Bond Details: Coupon 5.98%, Maturity 1/30/2028, Offer Price 97.3, YTM 7.6%.
• Performance: Down 2.7pts yesterday, unchanged this morning.
• Analysis: Zhongsheng issued a profit warning, but the impact is not considered alarming. The company's FY25 net assets are expected to remain higher than previous years, and liabilities lower than FY25. Despite the warning, buy recommendation is maintained due to its attractive risk-return profile and low refinancing risk.
• Liquidity: Strong liquidity management, with early redemption of USD630mn in previous months. Next major maturity is the RMB1bn Panda bond due Aug'27.
• Leverage: Net gearing at 29% as of Jun'25.

China Economic Outlook

Economic Performance in 2026

• Retail Sales: Grew to 4.8% YTD in 2M26, surpassing market expectations.
• FAI (Fixed Asset Investment): Grew to 1.8% in 2M26, significantly improving from -16% in Dec 2025.
• Industrial Output: Rose to 6.3% in 2M26, up from 5.2% in Dec 2025.

Outlook for 2026

• GDP Growth: Expected to decline from 5% in 2025 to 4.6% in 2026.
• Policy Expectations: A 50bp RRR cut and 10bp LPR cut are anticipated by the end of 2Q26.
• Property Sector: Continued to slump, with residential sales down 15.9% YTD and GFA sold down 13.5% YTD. Second-hand housing in 11 cities showed moderate recovery during the Chinese New Year, but sales softened again in early Mar.
• Durable Goods: Auto sales fell further due to the phasing out of purchase tax subsidies.
• Infrastructure Investment: Rebounded to 9.8% in 2M26, driven by newly allocated fiscal funding.
• Manufacturing Investment: Recovered to 3.1% in 2M26 from -10.6% in Dec 2025.
• Service Output Index: Grew to 5.2% in 2M26, with strong growth in IT, software, transportation, and dining & lodging.

Risks and Concerns

• Export Strength: May fade after early-year surge.
• Property Slump: Remains a major drag on the economy.
• Durable Goods Demand: Overdraft could lead to further contraction.
• Energy Prices: May ease deflation but are more cost-push than demand-driven, potentially squeezing downstream margins and household purchasing power.

Macro News Recap

• Equity Markets: S&P (+1.01%), Dow (+0.83%), Nasdaq (+1.22%) all rose.
• UST Yields: Lower on Monday, with 2-year yield at 3.68%, 5-year at 3.80%, 10-year at 4.23%, and 30-year at 4.86%.

Offshore Asia New Issues

Priced Issues

Pipeline Issues

News and Market Color

• Onshore Primary Issuances: 115 credit bonds issued yesterday, totaling RMB73bn. Month-to-date total of RMB849bn, up 15.9% yoy.
• APRA: Plans to ease capital settings for major lenders.
• Alibaba Group: Overhauling operations to focus on AI businesses.
• Bank of East Asia: Early redemption of BNKEA 6.75 03/15/27 on 16 Mar'26.
• China Water Affairs: Planning to issue USD500mn in 3yr/5yr USD bonds.
• Fosun: Secured USD400m in loan commitments to refinance USD500mn-equivalent facility.
• Seazen: CEO Lv Xiaoping resigned, but impact is considered immaterial due to Wang family's 63% ownership.
• ReNew Energy Global: Secured USD95mn equity investment from LeapFrog-led consortium.
• LG Electronics: Plans to spend cUSD2.7bn in 2026 on quality improvements and facility upgrades.
• Petron: FY25 EBITDA rose 22% yoy to PHP52.4bn (cUSD874.7mn).
• POSCO Holdings: S&P downgraded to BBB+ from A- with stable outlook.
• SK On: In talks with US developers for ESS battery supply.
• San Miguel Global Power: FY25 EBITDA up 27% yoy to PHP70.5bn (cUSD1.2bn).
• Vedanta Ltd: Raised INR25.7bn (cUSD278mn) via 3-year NCD.

Important Disclosures

• CMBIGM does not provide individually tailored investment advice.
• Past performance is not indicative of future results.
• The report is for informational purposes only and not an offer to buy or sell securities.
• CMBIGM is not a registered broker-dealer in the U.S. and may have conflicts of interest.
• The report is subject to change and may not be reproduced without prior written consent.

Disclaimer

• UK: Report is only provided to persons falling within Article 19(5) or Article 49(2) of the Financial Promotion Order.
• US: Intended for "major US institutional investors" only.
• Singapore: Distributed by CMBISG, an Exempt Financial Adviser. Legal responsibility is limited to the extent required by law.

Contact Information

• Fixed Income Department:
  Tel: 852 3657 6235 / 852 3900 0801
  Email: fis@cmbi.com.hk

• Authors:

  • Glenn Ko, CFA: (852) 3657 6235 / glennko@cmbi.com.hk
  • Cyrena Ng, CPA: (852) 3900 0801 / cyrenang@cmbi.com.hk
  • Yujing Zhang: (852) 3900 0830 / zhangyujing@cmbi.com.hk