Asia New issues amounted to US15bn last week, USD11.4bn coming from Asia-ex Japan. China accounted for US$5.1bn of this with LGFV Guangzhou Development District (GZGETH), Beijing Gas, China Chengtong HK, ABC and CCB in the mix. CCB came out with a jumbo USD2bn 10NC5 T2 offering at 2.9% (T5+140bp) which was seen as good value, tightening by 10bps in secondary while the rest of China IG widened 10bp. China Huarong (BBB/Baa3) was down another 1.5pts, which puts it at the level of non-China BB’s.
The bad news continued to flow for China property: Guangzhou R&F’s distressed tender and extension, Golden Wheel’s missed coupon payment and Dafa’s distressed exchange. Moody's withdrew Yango's ratings due to insufficient information as Fitch pushed the rating down to CCC-, Guangzhou R&F was cut to SD by S&P while Shimao ratings were withdrawn by S&P and cut to B2 from Ba3 by Moody’s, and B- according to Fitch.
Monday was a bit of a shocker. The star of the show was Logan Property (BB-), falling as much as 15 points, despite the company buying back $20mm of LOGPH 7.5% 22 on Friday. The market is still concerned about hidden debts, an issue not exclusive to Logan. Country Garden (BBB-) was down 10 points and CIFI Holdings (BB-) down 8pts. Already discounted distressed names faded around 1pt as real money continues to liquidate holdings. Tuesday morning is getting some respite, with a short covering rally pulling the market up as much as 6pts in places.
Macau gaming was immune to the fortunes of the China property sector and rallied 1-2 pts on Monday following the release of the long-anticipated gaming bill by the Executive Council on Friday, ahead of concession expiration in June. Although there were no surprises, or perhaps because of it as it removes a threat to the sector.