Tuesday was difficult day for Shimao. The curve was another 12-15 pts lower in the Asia morning after falling 10pts on Monday. Some large blocks went through in last hour of trading pushing longer maturity bond prices into the 50’s and the into the 60’s for the short end. Onshore longer bonds are now in the 30’s. Shimao has a RMB 30mm bond due on Friday and the company is busy reassuring the market that they have funds to cover the redemption.
High beta HY China property was as much as 4pts lower. Bucking this trend was Tsinghua, which rallied 15pts after the release of its restructuring plans.
This morning China HY property slipped again on heavy selling at the open but has started rebound on short covering. The US$ Shimao curve continued to tumble, down another 6 points, converging with the onshore market.
Government owned China Resources Land (BBB+) has been granted a CNY 1bn-equvalent ESG loan by DBS (Hong Kong) and is lining up to issue CNY 2.5bn of 3-year corporate bonds tomorrow. It is certainly a good time to have cash and could lend a little help to ailing property companies.
After a couple of extraordinarily light volume sessions, the US Treasury market feels coiled and braced for tonight’s FOMC. November U.S. PPI beat consensus, rising to a record high +9.6% y/y added to concerns that the Fed will strike a more hawkish policy path moving forward, so watch the dots survey, as we are essentially in 2022.