20220106-招银国际-Fixed_Income_Daily_Market_Update_4页_826kb

CMBI Credit Commentary Summary

Core Content

This document is a Fixed Income Daily Market Update from CMBI Fixed Income Department, summarizing the market performance and key developments in the Chinese High Yield (HY) and Investment Grade (IG) bond markets, along with macroeconomic news and new issue activity.

Main Market Observations

China HY Market

• The China HY market opened weak, with several names down 1-2 points.
• YUZHOU showed more front-end weakness, with a price drop of 1-2 points.
• GZRFPR (Guangzhou R&F Property) saw a muted decline due to a valid tender of its 5.75% 1/22 notes.
• YUZHOU entered into a framework agreement to sell its residential property management subsidiary to China Resources Mixc for up to RMB1.06bn, likely leading to liability management on its 2022 Jan notes.
• LOGPH recovered to flat after confirming interest payments had been made.

China IG Market

• IG flows remained firm, driven by positive sentiment from rising U.S. Treasury yields.
• Chinese AMC names like HRINTH and CCAMCL saw strong demand with spreads tightening by 2-3bps.
• SOE names like HAOHUA also had tighter spreads (1-2bps).
• TMT sector showed positive flows, with BIDU and BABA narrowing spreads by 4-5bps.

Key Developments

GZRFPR: Tender Offer and Consent Solicitation

• Guangzhou R&F Property received 95.9% valid tender from noteholders, surpassing the 75% threshold.
• Option A (upfront cash payment at 83) had 71.7% participation.
• Option B (50% tender at 100, rest maturity extension) had 24.2% participation.
• Earmarked funds for the tender offer are much lower than the previously expected USD300mn, significantly reducing the maximum acceptance ratio.
• Noteholders may now consider Option C (maturity extension by 6 months to 13 Jul'22).
• With USD200mn earmarked funds, upfront cash payment would be around 28pts, lower than the previous assessment of mid-30 to mid-60.

Macro News Recap

• U.S. stock market fell sharply, with S&P (-1.9%), Nasdaq (-3.3%), and Dow (-1.1%) down due to tech sector headwinds and hawkish Fed policy.
• U.S. Treasury yield curve steepened, with the 10Y yield at 1.71%, 30Y yield at 2.09%, and 1Y/5Y yields at 0.41% and 1.43% respectively.
• Overly stretched stocks may struggle to justify valuations amid rising yields.

New Issue Activity

Offshore Asia New Issues (Priced)

Offshore Asia New Issues (Pipeline)

• No new issues in the pipeline today.

Onshore China Conditions

• SUNSHI (Yango Group): Executive chairman and CEO Zhu Rongbin resigned.
• The report is issued by CMB International Securities Limited, a subsidiary of China Merchants Bank.

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 in the report.
• The author has not traded in the stocks covered in the report within 30 days prior to the report's release and will not trade within 3 business days after release.

Important Disclosures

• Investment Risks: There are risks involved in transacting in any securities.
• No Investment Advice: The report is not tailored to individual investors.
• Uncertain Returns: Past performance does not guarantee future results.
• Liability Disclaimer: CMBIS is not liable for any loss, damage, or expense incurred from reliance on the report.
• Conflicts of Interest: CMBIS may have investment banking relationships with the issuers covered, which could affect the report's objectivity.

Disclaimer

• The report is intended for CMBIS clients and affiliates only.
• UK Recipients: The report is only provided to persons falling within Article 19(5) or 49(2) of the Financial Services and Markets Act 2000.
• US Recipients: CMBIS is not a U.S. broker-dealer. The report is for major US institutional investors only.
• Singapore Recipients: The report is distributed by CMBI (Singapore) Pte. Limited, an Exempt Financial Adviser, and is subject to Singapore regulatory requirements.