20220506-招银国际-Fixed_Income_Daily_Market_Update_5页_1mb

CMBI Credit Commentary Summary

Core Content Overview

This document provides a comprehensive market update and analysis from the Fixed Income Department of CMBI, focusing on recent developments in fixed income markets and the Chinese property sector. It includes market sentiment, key stock and bond movements, macroeconomic news, and policy implications for lower-tier cities.

Main Market Updates

Fixed Income Market Movement

• AT1 bonds fell by 0.25 points.
• Long-end IG bonds showed weakness.
• GRWALL remained broadly unchanged.
• TQLTHI '22 was reiterated as a Buy at 96 mid-px, due to:
  • Strong operating cash flow
  • Progress on new bank loan
  • Rising value of its 23.77% stake in SQM (now worth USD 5bn)
• Chinese HY property sector rebounded with higher quality names outperforming, including:
  • CIFIHG up 0.5-1pt
  • COGARD up around 1pt, driven by senior management's purchase of RMB 40mn of onshore bonds
• Underperformers included:
  • KWGPRO (-3.7pt)
  • SUNAC (-1-2pt)
  • GZFYRE (-11.7pt)
  • JIAYUA (-5.1pt)
  • EHOUSE (-4.8pt)

Chinese IG Market

• The market recovered after the FOMC meeting.
• Front-end curves saw increased buying interest.
• Benchmark names tightened by 5bps.
• In the TMT sector, LENOVO/HUAWEI tightened by 5-7bps.
• The SOE sector remained stable despite the US SEC adding over 80 companies to its delisting risk list.

Financial Sector

• GRWALL saw front-end buying and continued to rise by 0.25-0.5pt.

Macro News Recap

• U.S. stocks closed sharply lower on Thursday, with the Nasdaq recording its largest one-day decline since June 2020.
• The S&P 500, Nasdaq, and Dow all fell by 3.56%, 4.99%, and 3.12% respectively.
• Treasury yields slightly increased, with the 1/5/10/30-year yields at 2.08/3.01/3.05/3.15%.

China Property Sector Analysis

• Zhuzhou, Hunan released 19 stimulus property policies on 29 April 2022, following the Poli-Bureau's meeting.
• The city's property market has been struggling since 2020, with GFA sold declining from 8.6mn sqm in 2018 to 5.7mn sqm in 2021.
• Huachen, the largest local developer, faced liquidity issues in 2020 and was bailed out by the Zhuzhou State-owned Assets Investment.
• In 2021, Huachen defaulted and entered bankruptcy, while Zhuzhou Granduer Group also faced financial difficulties.
• The property market in Zhuzhou became stagnant due to:
  • Delayed project completions
  • Reduced buyer confidence
  • Government platforms halting deliveries due to low interest
• Recovery efforts in 2022 included:
  • Involvement of Jinke, China Huarong AMC, and Zhejiang Jinhui Trust
  • Resuming land sales approvals
  • Utilizing equity investments in Sansure Biotech Inc. for refinancing
  • Projects will resume only after passing safety and quality tests

Offshore Asia New Issues

• No new issues were priced today.
• No pipeline of new issues was reported.

Market Conditions and Color

• Onshore primary issuances totaled RMB53bn yesterday, with 107 credit bonds issued this month for RMB105bn, a 141.8% yoy increase.
• US SEC added 88 Chinese companies to its provisional delisting list, including JD.com, Tencent Music Entertainment, Sinopec, VNET, NetEase, Pinduoduo, Bilibili, Trip.com.
• Key corporate actions:
  • GRNCH raised RMB1.5bn via three-year MTNs.
  • RSMACA is in talks with major CMBS holders to manage June put.
  • SINOCE repurchased USD64mn of due-2022 notes and USD3mn of due-2023 notes.
  • WYNMAC received financial covenant waivers from Bank of China.
  • ZHPRHK obtained a one-year extension on RMB153mn ABS due on 8 May.

Author Certification

• The author certifies that the views expressed in the report accurately reflect their personal views.
• No compensation was directly or indirectly related to the specific views expressed.
• The author did not trade in the stocks covered in the report within 30 days prior to its issuance or within 3 business days after.

Important Disclosures

• This report is for informational purposes only and not investment advice.
• Past performance is not indicative of future results.
• The value and returns of investments are uncertain and not guaranteed.
• CMBIS does not provide individually tailored advice and encourages consultation with a financial advisor.

Disclaimer

• CMBIS or its affiliates have investment banking relationships with the issuers covered in this report.
• This report is not an offer or solicitation to buy or sell securities.
• It is intended for major U.S. institutional investors only.
• In the UK and Singapore, the report is distributed only to specific investors as defined by local regulations.

Key Takeaways

• TQLTHI '22 is recommended as a Buy due to its financial resilience and stake in SQM.
• The Chinese property sector is under pressure, especially in lower-tier cities like Zhuzhou.
• Macro risks from U.S. market volatility and delisting threats affect investor sentiment.
• Onshore credit issuance increased significantly this month, showing market activity.
• Corporate actions and policy responses are critical in shaping market outcomes.