20250617-招银国际-Fixed_Income_Daily_Market_Update_7页_844kb

Fixed Income: CMBI Credit Commentary

Market Update

• Asian G3 Bonds: INDKOR 3yr/5yr bonds priced at SOFR+58/T+47, stronger than IPTs. Korean bonds (LGENSO, HYUELE/PKX) tightened 2-3bps. Japanese insurance hybrids showed moderate buying interest.
• Chinese IGs: CNOOC/SINOP 42-52s weakened (1-5bps wider), BBLTB 35-40s tightened due to AM/PB buying.

Bond Highlights

SHIKON (SKL) USD T2 Bond

• 10yr bond at T+230-240bps (FV 6%), vs IPT T+290bps.
• Analysis: Peer CATLIF/NSINTW at T+290bps; SKL has weaker credit profile (lower ROA, higher FX hedging costs), but regulatory approval for merger with Taishin FHC could support market position.

China Economy

• GDP growth expected: Q2 2025 at 4.9% (previously 5.4%), H2 at 4.7%.
• Property sector deterioration: GFA sold continues to decline (-2.9%), housing starts (-22.8%). Expected structural rebalancing by 2025-2027.
• Retail sales surged in May (6.4% YoY vs 5.1% Apr), driven by trade-in schemes.

New Issues

• Onshore Asia: RMB1.006tn raised in month-to-date, 25.3% YoY growth.
• Offshore Asia:
  • Hanwha Life: 30NC5 rated A3.
  • MTR Corp: PerpNC5.5/PerpNC10.5 rated A2.
  • Shin Kong Life: 10yr T2 bond at T+290bps.

Key Risk Points

• Property Market: Further policy easing expected.
• Global Macro: US-China trade deal may support fiscal expansion.
• Geopolitical: Israel-Iran attacks eased oil price impact.

Brexit Concerns

The UK’s growing budget deficit highlights concerns over debt sustainability, particularly affecting Northern Ireland. Rising inflation and wage pressures strain public finances, influencing fiscal policy and bond markets. Recent projections suggest deficits may exceed 3% despite targeted welfare cuts, reflecting the government’s fiscal challenges. Policy decisions involve balancing immediate economic needs with long-term fiscal health.