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Bond Market Insights - Fri, 16 Sept 2022

At last, some supply for Asia credit. Two 3yr deals came on Thursday, $300mm Korean Airlines (Aa2/AA) 4.75% 9/25 and a small $100mm green bond from JL Power Technology, backed by a SBLC from China Merchants Bank. The unrated deal carries a coupon of 4.8%.

Friday’s early offerings include three year deal for Shaoxing Shangyu State-owned Capital Investment and Operation Co. (BBB- Fitch), price guidance 5.6%, and for Hong Kong Xiangyu Investment, guaranteed by XMXYG the supply chain management company. Price guidance at 6.1%. HK based rating agency Lianhe Global granted XMXYG a BBB+ rating, which will be applied to the issue.

Chinese Property was strong on the back of a REDD Insight saying that President Xi approves homebuying relaxation in most of China’s cities". Country Garden was up 4pts, Roadking up 6pts before profit-takers emerged.

Yicai reported that Guangzhou will allow new home prices to be cut by 20%, to help get the market moving. They are the first of the four top tier cities to allow such discounting. Previously the limit was set at 6%.

The rating agencies are out with red pens. Moody’s hit CIFI 1notch to B2, S&P slapped China SCE 2 notches to B- and Fitch took Sino-Ocean down 1 to BB. All were left on negative watch.

Fosun recovered its composure after the company met with Beijing SASAC. They also announced that they plan to sue Bloomberg for misleading news. FOSUNI bonds rallied 4pts.

CNY remains above 7.00 today despite the economy showing signs of recovery. IP growth accelerated to 4.2% (3.8% expected), retail sales were up 5.4% (3.3% expected) up from 2.7% in July, urban jobless slid to 5.3% from 5.4% and fixed asset investment was up 5.8%. The PBOC daily fixing will be closely watched.

A glimpse at LATAM, as Chile was cut to A2 from A1 by Moody's. Argentina CPI rose 7% m/m in August, 78.5% y/y, mostly due to the continued devaluation of the currency.

Bahamas 10yr bonds are up almost 10pts since early August, celebrating the end of a mild hurricane season. The current account narrowed and international reserves are on the mend, rising to $3.4 billion from $2.4 billion at the start of the year

Brazil’s Central Bank's Monthly Index of Economic Activity (IBC-BR) rose 1.17% m/m in July, much more than the 0.4% m/m increase that was expected by the market. Tax cuts and new social assistance programs helped boost demand.

Colombia’s 2023 record $93.3bn budget was approved, the $3.2bn increase to go towards social; programmes, agriculture (budget doubled), health and social spending. The government will start raising fuel prices in October, then speed up the increases in 2023 as inflation wanes according to finance minister Ocampo.

In Africa Angola has displaced Nigeria as the continent's largest crude oil producer. According to OPEC's monthly report, Angola produced 1.17bpd while Nigeria's oil production has been beset by supply disruptions, lack of investment and theft. Vandalized pipelines resulted in the theft of 1bn of crude in the first quarter



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