20220914-招银国际-Fixed_Income_Daily_Market_Update_7页_860kb

CMBI Credit Commentary Summary

Core Content Overview

This document provides a comprehensive analysis of the fixed income market, focusing on the performance of specific issuers and sectors, particularly in the context of macroeconomic developments and corporate actions. It includes insights on market trends, investment opportunities, and risk assessments for various credit instruments, along with key financial data and updates on new issues and market conditions.

Main Market Trends

• Market Performance: The market was modestly weaker with mixed activity. LGFVs and SOEs showed varied performance, with low-4% names slightly better selling and those between high-4% to 5% supported due to the higher rates outlook.
• LGFV/SOE Perp: Investors were cautious ahead of the CPI release, with demand driven by carry. Offshore investors focused on very short-dated papers around 4%, while cross-border flows sought selective LGFVs at ~5% or more.
• Trading Activity:
  • Top Performers: APLNIJ, MPEL 25-27s, MPEL 24-25s, FTLNHD, and GRNLGR 22-23s showed positive price movements.
  • Top Underperformers: FOSUNI bonds experienced significant declines, with some falling 8-10 points. The gaming sector showed resilience, with WYNMAC and MGMCHIs/STCITYs/SANLTDs ending the day higher.

Key Sectors and Issuers

HPDLF (Hopson Development Limited Finance)

• Recommendation: Maintain a buy position on HPDLFs due to their attractive lower-beta and short-tenor characteristics.
• Outstanding Bonds:
  • HPDLF 8% '23 (CBs): O/s amount USD250mn, offer price 86.9, YTM 57.0%, maturity 6/1/2023
  • HPDLF 6.8% '23: O/s amount USD237.5mn, offer price 69.3, YTM 39.4%, maturity 28/12/2023
  • HPDLF 7% '24: O/s amount USD300mn, offer price 61.0, YTM 41.5%, maturity 18/5/2024
• Liquidity and Repayment: Hopson has a strong repayment history, including the repayment of USD1.1bn in 2022. Its cash and current financial investments provide a 1.0x coverage of short-term debt, offering good liquidity.
• Debt Reduction: Net debt decreased by 6.8% to HKD77.4bn in 1H22, with net gearing and adjusted liabilities/assets ratios improving to 68.3% and 60.0%, respectively.

Macau Gaming Sector

• Deadline: Today is the deadline for submitting tenders for gaming concessions in Macau. Wynn submitted its tender yesterday, and all six operators are expected to submit by today.
• Financial Support: Operators like SJM and Sands China have secured financial support from shareholders, including rights issues and loans.
• Market Outlook: The sector remains range-bound without significant policy changes. Bonds are trading near the high end of their recent range. The author recommends closing trading buy on SJMHOLs and waiting for a better entry point.
• Positive Catalysts: Passenger ferry services between Shenzhen and Macau resumed today, offering a small positive, but the key drivers remain the travel visa and quarantine policies.

Other Market Highlights

• Onshore Primary Issuances: 39 credit bonds were issued yesterday, totaling RMB38bn. Month-to-date, 434 credit bonds were issued for RMB484bn, representing a 10.5% yoy decrease.
• New Issues and Pipeline:
  • Jiantou International (Hong Kong) issued USD74mn 3-year bonds with 6.4% coupon.
  • Jinko Power and Tianjin Rail Transit have new issues in the pipeline.
• Corporate Actions:
  • Adaro Energy plans to invest USD1.1bn in an aluminum smelter.
  • Bumi Resources converted MCBs into 3.8bn shares at IDR80.
  • Bayan Resources saw a 96% yoy revenue increase and 181% yoy net profit rise.
  • FWD Group refiles for HK IPO.
  • KWG Group received bondholder support for its exchange offer and will issue new USD notes.
  • Poly Development injected RMB365mn into Joy City Property.
  • Sunac waived the 11 Sep put on its RMB1.3bn bonds and amortized redemption.
  • Tus-Holdings terminated consent solicitations for its senior notes.
  • Yincheng International completed an exchange offer.
  • Zensun Enterprises fully repaid USD36.4mn notes.
  • Zhengrong exercised put options on RMB1bn bonds.

Macroeconomic News

• U.S. CPI Release: The U.S. CPI for Aug'22 was published at +8.3% yoy, higher than the expected ~8.0%. This has led to a slump in U.S. stock markets and higher treasury yields, with the 2/5/10/30-year yields at 3.75%/3.58%/3.42%/3.51%, respectively.
• Impact on Markets: The unexpected CPI data has raised concerns about the Fed's rate hike continuation, affecting the overall market sentiment.

Financial Overview

• Hopson's Financials:
  • Investment losses in 1H22 were HKD1.8bn, while investment gains in 18-month to Jun'21 were HKD13.9bn.
  • The book value of financial assets was HKD8.0bn, with HKD2.6bn in current financial assets (mainly HK-listed equities) and HKD5.4bn in non-current financial assets (pre-IPO and PE investments).
  • Investment property portfolio valued at HKD85bn, with 95% of GFA in Tier 1 cities and LTM rental income of HKD4.2bn.
  • Outstanding CMBS was HKD13.3bn, with headroom for additional CMBS at cHKD29bn (cUSD3.7bn) assuming a 50% LTV.

Important Disclosures

• The report is not an offer or solicitation to buy/sell securities.
• It is intended for major U.S. institutional investors only.
• CMBIGM is not a registered broker-dealer in the U.S., and the report may not be distributed to others.
• In Singapore, the report is distributed by CMBISG, an exempt financial adviser, and may not be provided to non-accredited investors without consent.
• In the UK, the report is only provided to certain categories of investors as defined by the Financial Promotion Order.

Conclusion

The fixed income market remains cautious, with LGFVs and SOEs showing mixed performance. HPDLFs are viewed as attractive due to their liquidity and repayment track records. The Macau gaming sector is expected to remain range-bound unless there is significant policy relaxation. Investors are advised to monitor macroeconomic developments and policy changes closely.