20230602-招银国际-Fixed_Income_Daily_Market_Update_7页_767kb

Summary of Fixed Income Credit Commentary - 2 June 2023

Market Overview

The market was quiet today with most Asian investment-grade bonds unchanged, while Chinese asset-backed securities (AT1) edged up. New issues, such as HKINTL bonds, saw slight widening due to profit-taking amid reduced US Treasury yields. Macau gaming names remained stable, but their GGR growth accelerated significantly year-over-year, with a focus on non-VIP markets. Chinese fixed-income securities showed two-way interest, with TMT stocks like Xiaomi and Lenovo widening.

Key Developments

• Macau Gaming: Gross gaming revenue (GGR) in Macau surged, with 5-month cumulative GGR exceeding pre-pandemic levels. Analysts recommend MPEL, SJM, and STCITY bonds for better risk-return profiles, with potential yield pick-ups in high-yield issues.
• ZHLGHD Restructuring: Zhongliang (ZHLGHD) entered an agreement for a proposed offshore restructuring, involving upfront principal repayment, new senior notes with a 5% coupon, and Convertible Bonds with a 3% coupon and potential PIK interest. Mandatory redemptions are tied to sales targets.

Macro and Other News

US markets rebounded with gains in SP500 and Nasdaq after the debt ceiling bill passed. US employment data was mixed, and manufacturing PMI declined. Macau's May GGR reached an all-time high, while other news included updates on Adani Enterprises and Powerlong.

Analyst Comments

Trading desks highlighted shifts in bond flows, with profit-taking in short-dated papers and mixed performances in financials and industrials. Economic indicators showed resilience in services, supporting recovery in Macau gaming.

For detailed full analysis, refer to the original report.