20220926-招银国际-Fixed_Income_Daily_Market_Update_6页_1mb

CMBI Credit Commentary Summary

Core Content

This document is a Fixed Income Daily Market Update from the CMBI Fixed Income Department, covering market movements, sector analysis, macroeconomic news, and new issuance updates. It provides insights into the performance of various fixed income instruments, including LGFV, SOE Perps, AT1s, and specific corporate bonds, while also highlighting policy changes and macroeconomic developments that affect the market.

Main Market Observations

• Market Activity: Markets were generally quiet this morning. LGFV buyers' minimum yield hurdles increased due to the rise in treasury yields.
• Yield Trends:
  • LGFV buyers' minimum yield hurdles: 4.9-5.0% for 24s, 5.0-5.15% for 25s, and 5.25% for 26s.
  • U.S. stock markets fell sharply, with S&P, Dow, and Nasdaq down 1.72%, 1.62%, and 1.80%, respectively.
  • The USD index hit 113, the highest in 20 years, while GBP dropped 4% against USD.
  • U.S. Treasury yields rose, with the 2-year yield climbing and the yield curve inverting.
• Bond Performance:
  • Top Performers: CSCHCN'24, GRNLGR'22, LZINVE'22, CHINSC'24, and CNOOC'44 showed positive price movements.
  • Top Underperformers: AGILE bonds, including AGILE'25 and AGILE'26, fell significantly. LSEAGN'22 also underperformed.

Sector Analysis

Macau Gaming Sector

• Policy Relaxations: The Macau government announced the resumption of package tours from mainland China and the introduction of e-visa systems. These are expected to boost visitation and improve EBITDA for gaming operators.
• Visit Impact: The new policy aims to double mainland Chinese visitation to Macau, which currently accounts for 91.4% of tourist arrivals.
• Recommendation: Buy the Macau gaming sector, with the preferred order: SJMHOL > STDCTY > STCITY > MPEL = WYNMAC.
• Bond Performance: Macau gaming bonds rose 4-6pts this morning.
• Cash Burnt Reversal: The sector is expected to reverse the cash burn trend and achieve positive EBITDA by 1H23, driven by increased visitation and revenue.

TPHL (Times China)

• Default Risk: The company failed to pay USD13.95mn in interest on its USD450mn bond due on 22 Sep. It plans to remit funds within a 30-day grace period.
• Bond Movement: TPHL bonds fell 0.125-0.5pt this morning.

Trading Desk Insights

• SOE Perps & AT1s: These were down 0.25-0.5pt, with AT1s finally catching up with SOE Perps’ WTD correction. The spread continued to widen as rates climbed.
• LGFVs: 25s-27s papers were better sold by prop desks, repriced towards the low-5% range.
• Property Sector: IG property was slightly better, with VNKRLEs/YUEXIUs cash prices dipping 0.1-0.25pt.
• China HY: Weak due to poor sentiment from the property sector. COGARDs/CIFIHGs closed 0.5-1pt lower.
• Gaming Sector: Broadly down 0.5-1.5pts.
• India & Indonesia HY: Weak, with Indian renewables and Indonesian longer-duration bonds falling 0.25-1pt.

New Issues & Pipeline

• Priced New Issues:
  • Yancheng Oriental Capital: USD230mn, 3yr, 7.0% coupon, 7.0% yield.
  • Jinan Shizhong Finance: USD80mn, 364d, 6.0% coupon, 6.0% yield.
  • Liuzhou Dongcheng Investment: USD22.7mn, 3yr, 7.5% coupon, 7.5% yield.
• Pipeline: No offshore Asia new issues pipeline was reported today.

Key Policy & Operational Updates

• Macau's Quarantine Policy: Still in place for travelers from HK, Taiwan, and overseas, but relaxed for mainland China.
• License Renewal: Preliminary decision on new casino concessions expected in Nov'22. Base case: 6 incumbents will have licenses renewed.
• Restructuring Talks: Yango Group's offshore bondholders appointed Moelis/Linklaters as advisors for restructuring.
• Corporate Actions:
  • China Aoyuan paid 10% interest on its RMB1.82bn bond.
  • China Evergrande's Hong Kong headquarters is up for sale.
  • Gemdale repurchased onshore bonds to stabilize prices.
  • Jiayuan extended the deadline for its offshore bond exchange offer.

Risk & Disclaimer

• Investment Risks: The report highlights the risks associated with fixed income trading and emphasizes that past performance does not guarantee future results.
• Author Certification: The author certifies that the views expressed are their own and not influenced by compensation or conflicts of interest.
• Important Disclosures:
  • CMBIGM is not liable for losses incurred from reliance on the report.
  • The report is not an offer to buy/sell securities.
  • The information is provided for clients only and must not be reproduced or distributed without consent.
  • The report is intended for "major US institutional investors" and not for general distribution in the U.S.

Summary of Key Information

Contact Information

• Glenn Ko, CFA: (852) 3657 6235 | glennko@cmbi.com.hk
• Cyrena Ng, CPA: (852) 3900 0801 | cyrenang@cmbi.com.hk
• CMBI Fixed Income: fis@cmbi.com.hk

Author Certification & Legal Disclaimer

• The author certifies that the views expressed reflect personal opinions and are not influenced by compensation.
• The report is for informational purposes only and not investment advice.
• CMBIGM is not liable for any losses from reliance on the report.
• The report may contain conflicts of interest and is subject to change without notice.

Final Notes

• The market remains sensitive to yield movements and policy changes.
• Macau gaming sector is a key focus with potential for recovery.
• Investors are advised to seek professional advice and independently evaluate investment strategies.