20260506-招银国际-Fixed_Income_Daily_Market_Update_8页_923kb

CMBI Credit Commentary Summary

Core Content Overview

This document is a fixed income market update and credit commentary from CMBI's Fixed Income Department, covering recent market movements, new issue valuations, and macroeconomic highlights. It includes insights on key issuers such as Bank of East Asia (BNKEA), MGM China (MGMCHI), and Resolution Life (RESLIF), along with news and market color updates from various regions.

Market Update

• Asian IG Names: TW lifers, MEITUA, AACTEC, and LENOVO traded up to 5bps tighter due to better buying. PBs bought European AT1s, and AMs bought non-LGFV CNH issues.
• New Issue Valuation:
  • BNKEA 6NC5: FV is expected to be T + 145–150 bps, compared to IPT at T + 175 bps.
  • MGMCHI 7NC3: IPT of 6.5% is considered fair, based on similar instruments.
• RESLIF 6.875 Perp: Trading at 100.5, with YTC of 6.8%. Maintained as a buy due to attractive risk-adjusted returns and a strong credit profile.

Trading Desk Comments

• Middle East:
  • TAQAUH 49–51 dropped 0.5–0.7pt.
  • TW lifers tightened 1–3bps due to strong demand for CATLIF 41, SHIKON 35, and NSINTW 41.
• Hong Kong:
  • NWD denied media reports about selling hotel assets, though approached by potential buyers.
  • The NWDEVVL/VDNWDL complex traded 0.3pt lower to 0.3pt higher.
• Macau Gaming Complex:
  • SJMHOL, MGMCHI, MPEL, SANLTD, STCITY, WYNMAC were unchanged to 0.1pt lower.
• Chinese Properties:
  • VNKRLE 27' and 29' were unchanged to 0.2pt lower.
  • LNGFOR 27–32 traded 0.1pt lower to 0.1pt higher.
• SE Asian Space:
  • BBLTB T2 sub papers tightened 2–3bps.
  • GARUDA 31 was 0.5pt weaker.
  • MEDCIJ 26–30 closed 0.1pt lower to 0.1pt higher.
• Korea:
  • Front-end corporate issues (LGENSO, HYNMTR, HYUELE) traded 1–3bps tighter due to better buying.
  • The belly of the curve remained flat.
• Japan:
  • Recent new issues (MIZUHO 31, NIPLIF 31) traded 1–2bps tighter due to PB buying.
• European AT1s:
  • Traded in mixed but modest flows from Asia.
• Overall Flows:
  • Skewed to small better selling in the long end.
  • Largely balanced two-way in the front end and the belly.
  • HSBC 6.75 Perp/HSBC 7 Perp edged 0.1–0.2pt higher.
  • STANLN 7 Perp lost 0.1pt.
• LGFV Space:
  • Light two-way flows in front-end papers.

Key Issuer Analysis

BNKEA (Bank of East Asia)

• New Issue: BNKEA 6NC5, USD500mn, FV estimated at T + 145–150 bps.
• Valuation Basis: Based on BNKEA 5.125 07/07/28, BNKEA 4.875 04/22/32, and BNKEA 6.75 06/27/34, adjusted for payment rank and tenor.
• Company Profile:
  • Leading Hong Kong bank with HKD920bn in total assets.
  • FY25 operating income up 0.2% yoy to HKD21.0bn, driven by non-interest income growth of 28%.
  • Net income down 7.3% yoy due to NIM compression.
  • Impairment losses increased 2.6% yoy.
  • Capital adequacy improved, with CET1 ratio up 7% to 24.7%.
  • CAR increased to 28.2%.

MGMCHI (MGM China)

• New Issue: MGMCHI 7NC3, USD750mn, with IPT at 6.5%.
• Performance:
  • FY25 results showed a moderately stronger performance despite a 15.4% yoy drop in GGR market share.
  • Revenue up 10% yoy to HKD8.8bn, driven by 13% yoy increase in daily GGR and 19% yoy surge in daily mass GGR.
  • Adj. EBITDA increased 4% yoy to HKD2.5bn.
• Regional Performance:
  • MGM Cotai outperformed MGM Macau, with 10% yoy revenue growth vs 9%.
  • Adj. EBITDA growth of 11% for Cotai vs -8% for Macau.
• Branding Fee Impact:
  • New branding fee expense increased by USD23mn yoy, affecting margins.
  • Management indicated early progress in addressing underwriting performance.

RESLIF (Resolution Life)

• New Issue: RESLIF 6.875 Perp, USD750mn, with FV at 100.5.
• Financial Highlights:
  • FY25 net income jumped 47% yoy to USD139.8mn.
  • Premium income surged 79% yoy to USD2.8bn.
  • Total revenue up 13% yoy to USD9.5bn.
  • Adjusted book value increased to USD10.1bn.
  • Group BSCR ratio improved to c230%, above internal target and regulatory thresholds.
• Capital Structure:
  • Strong capital base supported by recent bond issuances.
  • Leverage ratio improved to 24%, below internal target.
  • Solvency ratios remain above regulatory requirements.
• Portfolio:
  • Manages USD62.6bn in assets, including public and private credit, structured assets, mortgage loans, and alternatives.
  • Private credit book of USD13.8bn is mostly US-based and investment-grade.

Macro News Recap

• U.S. Markets:
  • S&P, Dow, and Nasdaq all rose.
  • US JOLTS Job Openings for Mar'26 at 6.866mn, higher than expected.
  • US Apr'26 S&P Global Services PMI at 51.0, lower than expected.
• UST Yields:
  • 2/5/10/30 year yields at 3.93%/4.08%/4.43%/4.98%.

New Issues Summary

Priced Issues

• Japfa Pte: USD300mn, 5NC2, 7.95% coupon, priced at 8.25%, rating B1-/B+.

Pipeline Issues

• BNKEA: USD500mn, 6NC5, IPT at T + 175 bps, rating Baa2/BBB/-.
• MGMCHI: USD750mn, 7NC3, IPT at 6.5%, rating B1/B+/BB-.

News and Market Color

• Onshore Primary Issuances: Suspended during Labor Day Holiday.
• Saudi Arabia: Budget deficit widened to SAR125.7bn (cUSD33.4bn) in 1Q26.
• CK Hutchison Holdings: Agreed to exit 49% stake in VodafoneThree for GBP4.3bn (cUSD5.8bn).
• IIFL Finance: Plans to raise up to USD750mn via 3-year bonds.
• Nissan Motor: Plans to lay off 900 office workers (10% of European workforce) as part of global turnaround.
• New World Development: Denied media reports on selling HK hotel assets.
• Petron: 1Q26 revenue up 27% yoy to PHP246bn (cUSD4.0bn).
• PTT Global Chemical: Adjusted EBITDA up 176% yoy to THB14.9bn (cUSD455mn).
• Rio Tinto & South32 JV: To invest USD1.8bn in Brazilian bauxite project.
• Moody's Upgrade: Upgraded Vedanta Resources to Ba3 from B1, outlook positive.

Disclaimer

• Investment Risks: Transacting in securities involves risk; past performance is not indicative of future results.
• No Investment Advice: CMBIGM does not provide individually tailored advice.
• Distribution Restrictions:
  • Limited to CMBIGM clients and major US institutional investors.
  • CMBIGM is not a registered broker-dealer in the U.S.
  • Legal responsibility for Singapore recipients 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

• Analysts:

  • 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