Thursday saw Shimao bottoming which gave breathing space for the likes of Sunac, KWG and Agile to move up. Guangzhou R&F slipped 2pts despite the company holding an investor call to explain the tender offer. The Shanghai local authorities called several developers to a meeting to discuss debt, triggering hope that more supportive measures might be in the pipeline.
Today China HY property opened strongly, up as much as 3pts, Shimao as much as 8pts. Shimao 26’s traded at 56.00. Real money continued to add risk in BB- names, while small caps are struggling with continued selling.
RongXingDa Development (RISSUN) bonds were 3-5 pts higher following the announcement of an exchange offer, extending two bonds maturing in Jan and April 2022.
In the ongoing Series of Unfortunate Events China Fortune Land Development said it’s been unable to get a hold of a money manager it gave $313 million to invest, yet another blow to the debt-laden developer. Fortune said it has “lost contact” with China Create Capital.
Meanwhile Guotong Trust denied media reports of talks with Shimao Group regarding payment extension for certain trust plans
On the rates side inflation persuaded the BoE hike 15bps to 0.25% a day after Fed dropped the word transitory. The ECB cautioned of possible upside risk to inflation although reiterated that hikes in 2022 are unlikely. The Swiss kept rates at -75bps.
Greece received an early Christmas present from the ECB. It is allowed to reinvest proceeds from the PEPP bond-buying scheme into Greek government bonds, the ECB added “if the country needs support”. The ECB has purchased roughly €35Bn of Greek bonds under PEPP, but due to their credit rating they do not qualify for the APP (Asset Purchase Program).