20220908-招银国际-Fixed_Income_Daily_Market_Update_5页_937kb

CMBI Credit Commentary Summary

Core Content

This document provides a detailed market update and analysis from the Fixed Income Department of CMBI, covering recent developments in the fixed income market, including bond performance, new issues, and macroeconomic news. It also includes analyst comments and important disclosures regarding the content and use of the report.

Main Market Observations

Fixed Income Market Overview

• Market Sentiment: Defensive tone this morning, with better buying in the SOE (State-Owned Enterprise) sector.
• SOE Bonds: CHGRID'27 and SINOPE'31 tightened by 2-3 bps. Better buying in LGFV (Large Financial Corporations) at $5%+$, while better offers were seen below $5%$.
• New Issues:
  • BINHCO 5.3% 09/09/25 (USD100mn, SBLC by Shanghai Bank) was fairly illiquid, traded around 100 reoffer level.
  • BINHCO 5.6% 14/09/25 (USD144mn, SBLC by Bohai Bank) was priced today.
• LGFV Space: Flows were light and skewed to better selling, with CT2/CT3 inverted further.
• Chinese Properties:
  • Contract sales rebounded slightly in August 2022, with 17 out of 35 developers showing a 25% MoM increase.
  • The adverse effects of uncompleted properties and mortgage boycotts faded.
  • Local governments and developers have established real estate bail-out funds totaling RMB40bn (cUSD5.8bn) across five provinces.

Trading Desk Comments

• IG Space: Extended a firm session; financials continued a constructive tone, with AMCs (Asset Management Companies) closed unchanged to 0.5pt higher.
• AT1s: Slightly weaker due to RM trimming; ICBCAS 3.2% Perps fell by 0.25pt to 95.45.
• T2s: Stood solid with small selling from global accounts, well absorbed in the market.
• TMT Sector: TENCNT and XIAOMI tightened by 2-4 bps.
• China HY Space: Sideways to slightly down, as attention shifted from high-yield bonds due to a heavy primary day from Northeast Asia.
• Macau Gaming Sector: Weakened amid concerns about the latest Covid-19 situation in mainland China.
• MPEL/STCITY Curves: Underperformed, falling 1-3pts.
• China Property Performance: Mixed across the space, with COGARDs up 0.5-1.5pts and CIFIHG 24-27s gained 4-5pts despite S&P downgrade.
• CHINSC: Fell another 1-1.5pts after a 3-5pts drop on Tuesday, following talks to dissuade bondholders from exercising the put on its 2025 onshore bond.
• GRNLGR 5.9% '23: Jumped ~7pts, while other GRNLGRs were up 1.5-4pts.
• Industrial Space: FOSUNI 25-26s showed better selling flows from FM (Foreign Markets).
• New Issues (Outside China):
  • EIBKOR issued 2/5/10yr bonds at +55/+90/+120 bps, then squeezed to +45/+85/+112 bps at EOD.
  • INDON issued 5/10/30yr bonds at 4.4%/4.8%/5.55%.

Key Information

Top Movers

Top Underperformers

Macro News Recap

• U.S. Stock Markets: Rose on Wednesday after consecutive declines; S&P, Dow, and Nasdaq gained 1.83%, 1.40%, and 2.07% respectively.
• U.S. Treasury Yields: Lowered yesterday, with 2/5/10/30yr yields at 3.50%/3.37%/3.27%/3.42%.
• Chinese Trade: Increased 10.1% yoy in August 2022, with a RMB3.7tn trade surplus.

Analyst Comments

• Chinese Properties:
  • Contract sales rebounded in August 2022, with 17 developers showing an average 25% MoM increase.
  • Cumulative 8M22 sales for 35 developers declined 48% YoY.
  • Some developers, such as YUEXIU, GRNCH, SINOCE, and CRHZCH, were outperformers, while others like DAFAPG, CAPG, and LNGFOR were underperformers.
• New Issue Activity:
  • Several new issues were priced, including SUQIAN and TIANJIN Binhai.
  • Additional pipeline issues included Ningbo Beilun and Fuzhou Digital Economy Investment Group.

Market Conditions and Color

• Onshore Primary Issuances: 59 credit bonds issued yesterday with RMB54bn raised; month-to-date total of RMB352bn raised, a 22.8% yoy increase.
• Bondholder Actions:
  • ABM Investama subsidiary signed a corporate guarantee for USD200mn 9.5% notes due 2026.
  • CIFIHG was downgraded by S&P to BB- from BB due to rising leverage and a negative outlook.
  • CSI Properties repurchased USD3.87mn of its 5.45% notes due 2025.
  • Fantasia will convene a bondholders' meeting on 8 Sep regarding its 20Huayang01 bonds.
  • FWD Group postponed its Hong Kong listing to 2023.
  • China Vanke proposed asset-backed securities of RMB1.11bn (cUSD158.57mn).
• Investment Considerations:
  • The Fed's tone towards December will be key in shaping market outlook.
  • The market may require a bigger shock or longer time for price reversal due to heavy domestic investor holdings.

Important Disclosures

• Author Certification: The author certifies that the views expressed in the report reflect personal opinions and that there are no conflicts of interest related to compensation.
• Investment Risks:
  • The report is not tailored to individual investors.
  • Past performance does not indicate future results.
  • CMBIGM is not liable for any losses incurred from reliance on the report.
• Legal Restrictions:
  • The report is intended for specific clients and may not be distributed to others without consent.
  • Legal responsibility for the report is limited to what is required by law.
• U.S. Disclaimer: CMBIGM is not a registered broker-dealer in the U.S. and is not subject to U.S. research regulations.
• UK Disclaimer: The report is only provided to persons falling within Article 19(5) or Article 49(2)(a) to (d) of the Financial Services and Markets Act 2000.
• Singapore Disclaimer: CMBISG is an Exempt Financial Adviser and may distribute reports to non-accredited investors with legal responsibility.

Contact Information

• Glenn Ko, CFA: (852) 3657 6235 | glennko@cmbi.com.hk
• CMBI Fixed Income Department: fis@cmbi.com.hk
• CMB International Global Markets Limited: Wholly owned subsidiary of CMB International Capital Corporation Limited (a subsidiary of China Merchants Bank)