20220707-招银国际-Fixed_Income_Daily_Market_Update_5页_1023kb

CMBI Credit Commentary Summary

Core Content

This document is a Fixed Income Daily Market Update from CMBI Fixed Income Department, providing insights into the performance of Chinese corporate bonds and related market conditions. It includes market observations, trading desk comments, macroeconomic news, new issue updates, and important disclosures and disclaimers.

Main Market Observations

• China IG (Investment Grade) space continued to show weak sentiment.
  • GRWALL'25 dropped further to the 86 level.
  • CCAMCL AT1 declined by 2-3 points to 89.
  • CIFIHGs dropped 4-5 points this morning and 5-6 points the previous day.
• LGFVs (Local Government Financing Vehicles) showed some support in the short end, but overall sentiment remained weak.
• Chinese Properties experienced a strong MoM rebound in June 2022 contract sales due to relaxed COVID restrictions in the Yangtze River Delta (YRD).
• GZRFPR saw limited flow before the consent solicitation deadline, with the RSA (Revised Scheme of Arrangement) deadline the following day. The challenge remains in obtaining the required consent, especially given the slower amortization of GZRFPR'24s compared to RSA.

Trading Desk Comments

• Chinese IG market saw mostly selling flows, with spreads widening by 5bps on average.
• Financials showed one-way selling flows.
• GRWALL/HRINTH spreads widened by 10-25bps due to selling from RM (Regional/Global RM).
• Moody's placed China Great Wall under review for downgrade, increasing market pressure.
• Leasing names like BCOMFL/ICBCIL widened by 3-5bps.
• SOE (State-Owned Enterprises) papers generally widened by 5-7bps.
• TMT benchmark names broadened by 2-3bps.
• New issue KORGAS was 3-5bps wider.
• Distressed names were largely unchanged, while higher quality names like CIFIHG saw significant declines.

Top Movers

Top Performers:

• JINGRU 12 1/2 10/26/23: Price = 17.0, Change = +3.9
• EHICAR 7 09/21/26: Price = 59.8, Change = +2.0
• WYNMAC 5 1/2 10/01/27: Price = 64.1, Change = +1.3
• JINGRU 14 1/2 02/19/23: Price = 10.7, Change = +1.3
• JIAYUA 12 1/2 04/08/23: Price = 12.0, Change = +1.3

Top Underperformers:

• CIFIHG 6 07/16/25: Price = 52.0, Change = -6.9
• YUZHOU 6 01/25/22: Price = 7.0, Change = -6.7
• CIFIHG 6.55 03/28/24: Price = 60.2, Change = -6.6
• CIFIHG 5 1/4 05/13/26: Price = 49.7, Change = -6.4
• CIFIHG 4.45 08/17/26: Price = 49.9, Change = -6.4

Macro News Recap

• U.S. stock market closed higher, with the S&P 500 (+0.36%), Nasdaq (+0.35%), and Dow (+0.23%) all up.
• 2-year Treasury yields traded above 10-year yields overnight, and this trend continued in early New York trading.
• The Fed faces pressure due to this recession indicator, with a 88% chance of a similar-sized rate hike in the upcoming meeting.
• UST 10yr yields rebounded 12bps to 2.93%.
• The U.S. Treasury curve flattened, with yields at 2.97% (2yr), 2.96% (5yr), 2.93% (10yr), and 3.14% (30yr).

New Issues and Pipeline

• No offshore Asia new issues priced today.
• Pipeline includes:
  • LG Chem Ltd: USD, 3-year, T+165, rating A3/BBB+/-
  • Shanghai Pudong Development Bank London: USD, 3-year, T+80, rating Baa2/BBB/BB
  • Chongqing Hechuan City Construction Investment Group: USD, tap of 3-year, 6.3, rating -/-/-

Market Conditions and Color

• Onshore primary issuances:
  • 72 credit bonds issued yesterday with RMB73bn raised.
  • Month-to-date, 290 credit bonds issued for RMB339bn, representing a 26.7% YoY increase.
• AVIILC: AVIC International Leasing proposed to issue up to RMB600mn in five-year corporate bonds to repay interest-bearing debts.
• FRESHK: Far East Horizon raised RMB1bn via a 2+N-year MTN to repay bank loans.
• GZRFPR: Guangzhou R&F Properties obtained consent to reduce the first installment on its rescheduled bonds.
• RONXIN: Ronshine China made interest payments on extended bonds.
• SHIMAO: Shimao Services announced a consent solicitation for HKD3.11bn guaranteed CBs due 2022.
• TQLTHI: Tianqi Lithium priced its HK IPO at the top of the indicative price range, raising cHKD13.4bn (cUSD1.7bn), with shares expected to trade on 13 Jul'22.

Important Disclosures

• The information in this report is not suitable for all investors.
• CMBIS does not provide individually tailored investment advice.
• Past performance does not guarantee future results.
• The value and returns of investments are uncertain and not guaranteed.
• CMBIS may issue other reports with different conclusions or assumptions.

Disclaimer

• The report is intended solely for specific investors in the UK, US, and Singapore.
• In the UK, it is only provided to persons falling under Article 19(5) or Article 49(2)(a)-(d) of the Financial Promotion Order.
• In the US, it is only for major institutional investors, and not for general distribution.
• In Singapore, it is distributed by CMBISG, an Exempt Financial Adviser, and is subject to Singapore regulations.

Author Certification

• The author certifies that the views in the report accurately reflect his or her personal views.
• The author has no financial interest in the companies discussed.
• The author has not traded in the securities covered in the 30 days prior to the report's release.

Contact Information

• Glenn Ko, CFA: (852) 3657 6235 | glennko@cmbi.com.hk
• James Wen: (852) 3757 6291 | jameswen@cmbi.com.hk
• CMBI Fixed Income: fis@cmbi.com.hk
• CMBIS: CMB International Securities Limited, Fixed Income Department
  Tel: 852 3761 8867 / 852 3657 6291
  Email: fis@cmbi.com.hk

Conclusion

The report outlines a weak sentiment in the Chinese corporate bond market, particularly in the IG and LGFV sectors, with CIFIHG and GZRFPR showing significant price declines. Chinese real estate companies saw a strong MoM rebound in June 2022 sales, but year-on-year sales remain declining. The U.S. market showed positive performance, and interest rates are rising, adding pressure on the Fed. New issues and pipeline updates are provided, along with important disclosures and disclaimers to highlight regulatory and legal considerations.