Asia Bond Blurb - Tues, 15 Mar 2022

China IG credit slid with the Chinese equity markets. TMT widened another +15 to 25bps while SOE names such as Sinopec and CNOOC drifted another +2 to +5bps wider where they were bought by onshore accounts. There was some defensive deployment of cash in very front end but there was also some capitulation as private banking accounts were liquidating 2022 maturity quality paper for margin call purposes. SOE perps were around -0.5pt lower with Chinese real money selling where liquidity could be found.


Bank capital saw China AT1 trading 1-2pt lower. Once London came in we saw a similar underperformance from Standard Chartered 4.3% perp, which was trading around 86.50. Names like Lloyds were down 1pt.


IG LGFV’s were also weak. Short end papers (<1y) traded around 2.5-3.5% yield, anchored by POSABK’s weak performance.

China HY weakened by -5-10 points, the move accelerating as London came in., CIFIHG and Country Garden swooned another -5-6pt as private banks, real money and onshore accounts all hit bids, both the belly and the long end now trading below $40. There was a conspicuous lack of dip buying or short covering interest as HSI and SHCOMP indices broke through key support. SUNAC was down as much as 25 points as Fitch downgraded the borrower to B- retail investors were excluded from any onshore bond repurchases. The industrials Fosun and China Hongqiao got caught in the downdraught and fell 3 points in sympathy.


Asia sovereign bonds remain heavy as yields ramp higher and Asia sentiment remains under pressure. Liquidity is poor, Indonesia being the best of the lot. Locals still supportive of some issues but off-the-run long-end continues to be very heavy. There was selling of lower rated names, especially bank paper. Frontier credits fared better than IG. Sri Lanka made further gains, bouncing 1 to 2 points as players continue to take the news on the IMF talks as positive. Longer bonds are now in the high 40s. MONGOL and PKSTAN stabilized, with most enquiry being on the offer side.

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