CMBI Credit Commentary Summary
Core Content Overview
This document provides a comprehensive market update and analysis for the fixed income sector, focusing on China and other Asian emerging markets. It includes insights into market sentiment, trading activity, macroeconomic news, and new issue data. The commentary also highlights key investment opportunities, particularly in AT1 instruments and corporate bonds.
Main Market Observations
Market Sentiment
- Improved sentiment was observed due to the dovish FOMC meeting minutes and the anticipation of a China RRR cut.
- LGFVs (Local Government Financing Vehicles) showed a two-way balanced market, with slight favor towards better buys.
- SOE Perps (State-Owned Enterprise Perpetuals) continued to attract demand, especially for high-quality ones, with some short squeezes noted.
- High cash price papers slightly lowered by 0.5pt, while low cash names were stable with support from retail accounts.
China IG Space
- Stable to slightly firmer with AMCs (Asset Management Companies) and bank capitals mostly unchanged.
- HRINTHs (High Yield Retail Income Notes) lowered 0.25pt.
- AT1s were largely muted, but CCB T2 showed some squaring off flows.
- TMTs (Technology, Media & Telecommunications) were stable, with buying in higher beta names at wider levels.
- IG properties had positive headlines, with Vanke receiving a RMB200bn credit line from Bank of Communications and Bank of China.
- Sino-Ocean and Sino-Ce were mentioned for potential support from parent companies and local banks.
China HY Space
- Mixed performance, with properties unchanged or slightly lower.
- COGARDs (Sino-Ocean bonds) jumped 3.5–4.5pts across the curve.
- SINOCEs closed unchanged, but onshore bonds were traded higher due to potential support.
- FUTLANs/FTLNHDs lowered 2–4.5pts after S&P downgrade to BB-.
- YLLGSP '26 was bid up 4.5pts.
- New issues: BOCOM priced USD200mn 3y senior bonds at CT3+61bps.
Key Investment Picks
Asian EM AT1s
- KBANK 5.275 PERP and KTBTB 4.4 PERP are highlighted as preferred picks.
- Reasons: More balanced risk-return profile, limited call and distribution history, and ample capital buffers.
- Approach: Bottom-up analysis due to lower return predictability compared to Chinese G-SIBs and Asian DMs.
Macro News Highlights
U.S. Market
- Stock markets rebounded, with S&P (+0.59%), Dow (+0.28%), and Nasdaq (+0.99%) showing firmness.
- FOMC minutes indicated a potential slowdown in interest rate hikes.
- Long-term U.S. Treasury yields declined, with 2/5/10/30 yields at 4.46%/3.88%/3.71%/3.74%, respectively.
China Policy
- The State Council signaled further policy easing to boost growth.
- GDP growth forecasts:
- 2022: 3.3%
- 2023: 4.9%
- 2024: 4.5%
- Monetary policy will remain prudent with easing bias in 2023.
- RRR cuts are expected in the next four quarters.
- Credit policy will be eased, especially for manufacturing, tech, services, and SMEs.
- Mortgage rates for first and second-home buyers will be lowered.
- Fiscal policy will be proactive, with a broad deficit rising from 5.8% of GDP in 2022 to 6.1% in 2023.
New Issues and Pipeline
Priced New Issues
| Issuer/Guarantor |
Size (USD mn) |
Tenor |
Coupon |
Yield |
Issue Rating |
| LinJiang Investment and Development (BVI) Co., Ltd |
USD300 |
3yr |
7.1% |
7.1% |
-/-/- |
Pipeline New Issues
| Issuer/Guarantor |
Currency |
Size (USD mn) |
Tenor |
Pricing |
Issue Rating |
| China Reform Holdings Corporation LTD |
USD |
- |
3yr |
- |
-/-/- |
Top Movers
Top Performers
| Instrument |
Price |
Change |
| YLLGSP 5 1/8 05/20/26 |
60.0 |
+4.7 |
| COGARD 7 1/4 04/08/26 |
29.3 |
+4.6 |
| COGARD 5.4 05/27/25 |
31.2 |
+4.6 |
| COGARD 6 1/2 04/08/24 |
38.3 |
+4.5 |
| COGARD 4.2 02/06/26 |
29.0 |
+4.5 |
Top Underperformers
| Instrument |
Price |
Change |
| FTLNHD 4.8 12/15/24 |
46.3 |
-4.4 |
| FTLNHD 4 1/2 05/02/26 |
35.4 |
-2.5 |
| FTLNHD 4 5/8 10/15/25 |
41.5 |
-2.5 |
| FUTLAN 6 08/12/24 |
46.4 |
-2.4 |
| FUTLAN 4.45 07/13/25 |
39.6 |
-1.9 |
News and Market Color
- Onshore primary issuances: 73 credit bonds issued for RMB53bn yesterday, representing a 33.6% yoy decrease.
- CBICL provided guarantees for Longfor, Midea Real Estate, and Radiance Group.
- Agricultural Bank of China signed strategic agreements with China Overseas Land and Investment, China Resources Land, Vanke, Longfor, and Gemdale.
- Bank of Communications provided RMB100bn and RMB20bn credit lines to Vanke and Midea Real Estate.
- Macau may announce gaming concessions provisional winners in early December.
- Agile Group completed HKD783mn share placement.
- China Oil and Gas Group repurchased USD9mn of bonds.
- Fosun International is planning a minority stake sale in Cainiao.
- Greentown China intends to purchase RMB3bn bonds and RMB2bn corporate bonds/ABS from Greentown Real Estate.
- Heungkuk Life will receive fresh capital to repay repurchase agreements.
- Mongolian Mining Corp repurchased USD6.38m of perpetual securities.
- Sino-Ocean Group plans to refill RMB1.04bn Dec ABS or use internal cash.
- Yinchuan Tonglian Capital was downgraded by Fitch.
- China Vanke is considering RMB50bn direct debt financing and has an intended credit line of RMB100bn.
Disclaimer and Risk Information
- This report is not investment advice and should be independently evaluated.
- Past performance does not guarantee future results.
- Investors are encouraged to consult professional advisors.
- Conflicts of interest may exist, as CMBIGM may have investment positions or market-making activities in the mentioned companies.
- The report is intended for specific recipients only and not for public distribution.
- Legal restrictions apply to recipients in the UK, US, and Singapore.
Author Certification
- The primary author certifies that the views expressed accurately reflect personal opinions.
- The author has no financial interest in the covered securities.
- No compensation was directly or indirectly related to the views in the report.
