20240118-招银国际-Fixed_Income_Daily_Market_Update_5页_891kb

Fixed Income Credit Commentary Summary

New Issues Section

On January 18, 2024, new bond issues showed tightening spreads. Key highlights include Woori Bank's 2027/2029 issues tightening by 6-8bps this morning. Other new issues: POHANG/SUMIFL/SATSSP/SKENER tightened by 1-3bps each. China IG benchmarks like BABA/TENCENT/HAOHUA saw tightening of 0-2bps. Bank T2 issues were under better buying conditions, indicating some demand.

China Economy

Economic confidence remained weak due to the ongoing property slump and deflationary pressures. China Merchants Bank International (CMBI) maintains its GDP growth forecast at 4.8% for 2024, down from 5.2% in 2023. Retail sales slowed to a 7.4% year-over-month increase in December, with strong deflationary expectations hampering consumption. Housing sales continued to slump, while service and industrial outputs showed modest rebounds. The economy faces demand-side challenges, necessitating fiscal support like large transfers to households and mortgage rate cuts to boost consumer demand. Infrastructure investment slowed, but manufacturing and power sectors saw growth. Expectations for further policy loosening in 2024, particularly for the housing market.

Trading Desk Comments

Market activity yesterday saw UST yields widen by 7-11bps across the curve, with Asia IG space mixed. New issues like POHANG '27 and SKENER '27 tightened by 3bps. Secondary markets traded wider for high-beta TMTs (e.g., WB/METRO/XIAOMI) and AMC names, while banks and insurers showed varied movements. No specific Asia new issues in pipeline, but 103 credit bonds were issued onshore yesterday, raising RMB91bn. Mixed performance across sectors like industrials and gaming names, with Wynn Macau planning a 2.5%-6% pay hike from March. Bond yields ground higher amid profit-taking in high-yielding names.

Macro News Recap

Global markets declined, with S&P 500 down 0.56%, Dow 0.25%, and Nasdaq 0.59%. US retail sales rose 0.6% month-over-month, exceeding expectations. T-bond yields moved higher, reaching levels like 4.34% for 2-year and 4.10% for 10-year yields. News included US economic indicators and company updates like SK Hynix's chip production plans.

Desk Analyst Comments

The analyst emphasized China's demand-side economic issues over supply-side factors. GDP growth in 2023 was 5.2%, partly above government goals. Challenges include weak retail sales and property contraction, with potential mild improvement in 2024 due to employment recovery and policy tweaks. CMBI recommends caution in high-yield bonds and highlights risks in sectors like consumer discretionary.

For full details, refer to the original report.