20221027-招银国际-Fixed_Income_Daily_Market_Update_5页_803kb

CMBI Credit Commentary Summary

Core Content

This document is a Fixed Income Daily Market Update from CMBI, summarizing market movements, key news, and analyst views on various credit instruments and macroeconomic developments. It includes insights into bond performance, market sentiment, and policy changes, particularly in the context of Macau gaming and Chinese corporate credit.

Main Views and Key Information

Market Sentiment and Performance

• Overall Sentiment: Markets showed slight recovery, with short covering observed in LGFV/SOE Perps and AT1s. However, the overall tone remained weak, and demand beyond short covering was limited.
• China IG Space: Opened weakly but balanced flows were seen by the close of the day. Financials were mixed, with AMC underperforming.
• LGFV/SOE Perps and AT1s: Sentiment remained fragile due to thin bid liquidity. Client selling flows slowed as dealer-driven price corrections occurred. Short covering emerged in the afternoon as macro sentiment improved and the RMB strengthened.
• Bond Performance:
  • Top Performers: GRNLGR 6 1/8 04/22/22 (+7.5 pts), LPKRIJ 6 3/4 10/31/26 (+6.4 pts), KHLIIN 7 1/2 PERP (+4.4 pts), GRNLGR 6 3/4 06/25/23 (+4.0 pts), GRNLGR 6 3/4 09/26/23 (+3.9 pts).
  • Top Underperformers: NWDEVL 4 1/8 PERP (-10.9 pts), CKINF 4.85 PERP (-7.4 pts), NWDEVL 6.15 PERP (-7.2 pts), PRUFIN 4 7/8 PERP (-6.9 pts), TSIVMG 1.6 12/17/39 (-6.6 pts).
• Macau Gaming: Bonds were up 1-3pts yesterday but muted this morning. Positive news about the resumption of package tours from Mainland China and e-visa issuance boosted sentiment, though exact timing remains unclear. The Macau government expects visitation to double to 40,000 after these measures.
• Jiayuan: Extended the exchange offer deadline to 28 Nov'22 and terminated the consent solicitation.

Macro News Recap

• U.S. Markets: Weak performance with S&P down 0.74%, Nasdaq down 2.04%, and the Dow slightly up. Tech companies like Alphabet and Microsoft reported below-expectation Q3 results.
• U.S. Dollar Index: Declined 1.13% to close at 109.7.
• Interest Rates: The Bank of Canada increased rates by 50bps, below expectations.
• U.S. Treasury Yields: Dropped, with the yield curve flattening. 2/5/10/30-year yields at 4.39%/4.20%/4.04%/4.19%, respectively.

News and Market Color

• Onshore Primary Issuances: 94 credit bonds issued yesterday, totaling RMB119bn. Month-to-date, 1055 credit bonds issued for RMB1261bn, a 19.1% yoy increase.
• Key News:
  • eHi Car Services: Downgraded by S&P to B- with negative outlook.
  • Far East Horizon: Plans to redeem USD400mn FRESHK 5.6 PERP on 4 December.
  • GCL New Energy: Accepted USD145mn of GCLNE 10 01/30/24 for purchase.
  • Helenbergh China: Completed consent solicitation for 11% senior notes due 2023.
  • China Huarong: Plans to sell 28.11% stakes in Jiangxi Changjiang Chemical Industry for RMB95.6mn.
  • Lifestyle International: To hold a court meeting on 21 November to consider HKD5 per share privatization proposal.
  • Logan Unit: Scheduled to exercise put option on 19Longkong04 on 25-27 October.
  • Lippo Karawaci: 9M22 revenue was cUSD225mn, down 9% yoy. Total revenue reached 68% of FY22 target.
  • Road King Infrastructure: Delayed circular on 39.77% stake acquisition of Indonesian express way, expected to send circular around 14 November.
  • Shimao: Paid 15% of outstanding installment on RMB500mn private notes puttable in April on 26 October.

New Issues

• Offshore Asia New Issues (Priced): No new issues priced today.
• Offshore Asia New Issues (Pipeline): Yichun Development Investment Group Co., Ltd. is planning a USD-denominated 3-year issue with a coupon of 7.2% and an issue rating of -/-/BBB-.

Analyst Comments

• Macau Gaming: The resumption of package tours is positive, though the exact timing remains uncertain. The government is prioritizing regions like Guangdong, Zhejiang, Jiangsu, Fujian, and Shanghai for the relaxation.
• License Renewal: The base case remains that the 6 incumbents will have their licenses renewed due to tight timelines and minimal economic/political impact.
• Macau Visitation: Historical data shows that package tour accounted for 21% of total visitation in 2019, which is expected to increase post-relaxation.

Important Disclosures

• Risk Disclaimer: The report highlights the risks associated with securities trading and states that past performance does not guarantee future results.
• No Investment Advice: CMBIGM does not provide individually tailored investment advice.
• Conflict of Interest: CMBIGM may have investment banking relationships with the companies mentioned, which could affect the report's objectivity.
• Distribution Restrictions: The report is for the use of intended recipients only and cannot be reproduced or distributed without prior written consent.

Contact Information

• Fixed Income Department: CMB International Global Markets Limited
• Tel: 852 3761 8867 / 852 3657 6291
• Email: fis@cmbi.com.hk
• Author Certification: The views expressed accurately reflect the author's personal views, and no compensation was directly or indirectly related to the report.
• Author Team:
  • Glenn Ko, CFA: (852) 3657 6235 | glennko@cmbi.com.hk
  • Cyrena Ng, CPA: (852) 3900 0801 | cyrenang@cmbi.com.hk
  • Jerry Wang: (852) 3761 8919 | jerrywang@cmbi.com.hk

Legal and Distribution Notes

• UK Recipients: The report is provided only to persons falling within Article 19(5) or Article 49(2)(a)-(d) of the Financial Promotion Order 2005.
• US Recipients: CMBIGM is not a registered broker-dealer in the US and the report is intended solely for "major US institutional investors."
• Singapore Recipients: Distributed by CMBISG, an Exempt Financial Adviser, and subject to Singapore regulatory requirements.