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Asia Bond Blurb - Tues, 07 Dec 2021

Asia IG was 3-5bps wider yesterday as markets slumped, on light volumes. It has reversed this morning, tightening 2-4bps as participants mull the recent lack of supply and a better macro environment. Korean names were helped tighter today by some onshore buying.

China HY galloped up 2-5 points yesterday as China cut bank reserve requirement ratios by 0.5%,, which must have been deemed as the “appropriate time” that Premier Li Keqiang spoke of 3 days ago.

Sunac was the outperformer as shorts were squeezed while KWG Property fell 3pts on rumours that their boss is subject to travel restrictions. A bit of a shame for those who were focusing on their ability repay two private bonds totaling $300mm maturing this month, which were covered by the holdco cash levels and some offshore assets.

Evergrande slipped 2pts in the long end while the front end was down 3-10pts, into the low 20s, on plans to include all offshore debt obligations in the restructuring. Evergrande also announced the establishment of a Risk Management Committee in the “face of operational, financial challenges”; some could see this as a little tardy.

There were positive developments for Guangzhou R&F, who is selling 30% of Guangzhou airport logistic park properties to Blackstone for CNY 7.3bn, and Shimao Group, who announces HKD 1.173bn share placement, proceeds to repay debt. Greenland Holdings (Ba2) is the first major Chinese real estate firm to sell a USD bond in 2 months, albeit only a 9 month euro-MTN drawdown. Other issuers in the market include Wuxi Construction, BBB+ by Fitch, and an inaugural US$ issue for the supply chain management company, Xiamen ITG Holdings. The syndicate groups consist of Chinese institutions.

Following a rebound for markets yesterday in Europe and New York we have a few things to focus on today. Germany issues a 2yr Bundesschatzanweisungen, UK issues 30yr paper and the US has a 30yr buyback leading into a 3yr auction. 3yr yields are only 5bps from 1.00%, quite attractive for a front-end issue.



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