China's TMT sector saw selling in New York on Friday, a precursor to a widening of around +30bps today after WSJ reported that Tencent Holdings faces a record fine following China's central bank's discovery that WeChat Pay had violated money-laundering rules. The risk off tone spilt over to the rest of China IG corps with benchmark names +3 to + 10bps softer across the board. Real money accounts sold high step-up perpetual paper, which found little support, while there was good 2-way flow in bonds with calls under 1 year. CCAMCL 4.4 perp slipped 2 points to print an all-time low of 93.125 while the rest of AMC sector was +5 to +10bp wider over the day.
China HY had a "typical" weak Monday session to mimic risk off picture from macro. Benchmark property names closed down 3 to 5pts with CIFIHG falling as much as -9pts on real money, private bank and Chinese selling. Country Garden was down 4pts with two way flows from private banks and funds despite company announcing buy-backs in 2022 and 2023 bonds at weekend. Both COGARD/CIFIHG long ends are now well under $50, which could spell trouble at the next rating agency reviews
China Financials and LGFV were cautious on the back of higher UST yields and a weak preformance of China and HK equities, widening 3-5bps. AT1's saw heavy selling across the board. Bonds down around 0.5pt.