20220118-招银国际-Fixed_Income_Daily_Market_Update_5页_1mb

CMBI Credit Commentary Summary

Core Content

The document is a Fixed Income Daily Market Update from CMBI Fixed Income Department, covering market movements, sales performance of developers, and new bond issues in both offshore and onshore markets. It also includes trading desk comments, macroeconomic news, and desk analyst views on specific developers.

Main Points

Market Movements

• High-quality developers such as LOGPH, CIFIHG, and COGARD rebounded by 3-6 points due to expectations of housing policy easing.
• SUNAC, ROADKG, YLLGSP showed a more muted recovery, up 0.5-1 point.
• GZRFPR, REDSUN, SINOCE continued to trend downwards by -1 to -3 points.
• YUZHOU is expected to trade at mid-teens to low-20s before its exchange offer deadline tomorrow.

Trading Desk Comments

• China HY property sector remained negative, with several developers down 3-5 points.
• LOGPH fell significantly (-12 to -14 points) despite share repurchase and note redemption announcements.
• RONXIN outperformed, up around 10 points, after REDD confirmed sufficient cash to repay notes.
• COGARD rebounded slightly in the late afternoon session.
• Industrial and Macau gaming sectors showed mixed performance, with some names seeing buying interest.

FY21 Contracted Sales Update

• 42 developers reported a 3.4% drop in contracted sales compared to FY20.
• Top performers in sales growth:
  • PWRLNG (RMB101.2bn, +24% YoY)
  • DAFAPG (RMB37.6bn, +24% YoY)
  • GRNCH (RMB265.8bn, +22% YoY)
  • YUEXIU (RMB115.2bn, +20% YoY)
• Distressed developers saw significant sales deterioration:
  • EVERRE (RMB426.7bn, -41% YoY)
  • SINHLD (RMB81.5bn, -28% YoY)
  • MOLAND (RMB36.1bn, -15% YoY)
• Average target completion rate for FY21 is 88%, with only 4 developers hitting their targets (CRHZCH, YUEXIU, DAFAPG, RISSUN).
• Developers are expected to set conservative sales targets for FY22 due to industry challenges.

Offshore and Onshore Bond Market

Offshore Asia New Issues

• No new offshore bonds priced today.
• Pipeline includes:
  • Health and Happiness (H&H) International Holdings Ltd (USD400mn, Ba3/BB/-)
  • Henan Railway Construction & Investment Group (USD, A2/-/-)

Onshore China Conditions

• 95 credit bonds were issued yesterday with a total amount of RMB136bn.
• Month-to-date issuance amounted to RMB1030bn, a 28.9% YoY increase.
• Key events:
  • [BUMIJ] completed IDR 1.65tn rights issue.
  • [COGARD] repurchased USD10mn of senior notes.
  • [FOSUNI] plans to issue up to RMB2bn onshore bonds (1+1yr, 6.2%).
  • [HONGQI] raised RMB1bn onshore bonds (2yr, 4.5%).
  • [SHAGAN] forecasted net profit of RMB900mn–RMB1.215bn for FY21, a 38.56%–87.06% YoY increase.
  • [SHIMAO] received consents to amend and extend RMB450mn ABS and is selling two office floors at THE CENTER for HKD1.5bn.
  • [SHNSUN] plans to sell 51% of Hangzhou Bintuo Enterprise Management for RMB487mn and acquire a 7.3258% interest in a partnership owning Zhejiang residential land for RMB559mn.
  • [TPHL] was downgraded to B+ by S&P.

Macro News

• U.S. markets were closed for a public holiday.
• Global trading activity was light due to the holiday and lack of U.S. Treasury activity.
• Benchmark spreads widened by 1-2bps.
• Stocks were mixed globally:
  • Pancontinental Stoxx Europe 600 closed up 0.7%.
  • Shanghai Composite Index rose 0.6%.
  • Nikkei 225 increased 0.7%.
  • Hang Seng Index fell 0.7%.
  • Kospi Index dropped 1.1%.

Desk Analyst Comments: YUZHOU

• YUZHOU noteholders should consider accepting the exchange offer, which provides 6 points upfront cash and potential additional cash of 10.53 points if the sales of its property management subsidiary reach RMB1.06bn by mid-2022.
• Holdouts will retain the bonds with no changes to key terms, but may face cross default removal.
• The removal of cross default clauses suggests that YUZHOU may not pay holdouts.
• Holdout process could be lengthy and costly, especially if >90% of the bonds are exchanged.
• Refer to previous note for details: https://www.cmbi.com/article/6261.html?lang=en

Key Contacts

• Glenn Ko, CFA: (852) 3657 6235 | glennko@cmbi.com.hk
• Polly Ng: (852) 3657 6234 | pollyng@cmbi.com.hk
• James Wen: (852) 3757 6291 | jameswen@cmbi.com.hk
• CMBI Fixed Income: fis@cmbi.com.hk

Important Disclosures

• This report is for informational purposes only and should not be construed as an offer or solicitation to buy or sell any security.
• Investors should independently evaluate particular investments and consult with a professional financial advisor.
• CMBIS may have investment banking relationships with the companies mentioned, which could create conflicts of interest.
• The report is not suitable for all investors and is intended for major US institutional investors only.
• No liability is accepted for any loss, damage, or expense incurred from reliance on the report.

Disclaimer

• CMBIS or its affiliates have investment banking relationships with the issuers covered in this report within the last 12 months.
• The report is distributed in Singapore by CMBI (Singapore) Pte. Limited, an Exempt Financial Adviser regulated by the Monetary Authority of Singapore.
• Recipients in the UK or US must be qualified investors as per the Financial Promotion Order or Securities Exchange Act.
• The report is intended for intended recipients only and may not be reproduced, reprinted, sold, or published without prior written consent.