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Bond Market Insights - Mon, 28 Nov 2022

Asia credit activity was subdued on Friday with the US holidays, spreads continued to tighten. Technology media and telecom (TMT) were 2-5bp tighter, MEITUA eventually delivered better than expected results in Q3 with a 28% increase in revenues Y/Y. Bonds were up 2-3 points.

Property continues to be solid. PBoC will offer cheap loans to financial firms for buying onshore property bonds according to Reuters, another positive promise of support for the sector. Longfor, Midea RE and Seazan have been given permission to raise CNY50bn (US$7bn) in onshore debt. HY property was also strong. Country Garden was up another 8pts with Seazen, Gemdale and Greentown close behind.

In Financials, Tier 2 subordinated (T2’s) and leasing bonds were 5bps tighter, while the SOE short end saw two-way flow but sentiment still better bid. Big bank AT1’s rose 20cents, while asset managers chased China CITIC AT1 up around 1.5pts in a hunt for yield.

Outside China the mood for Financials was also jubilant. Singapore T2s outperformed having lagged, most of the interest being from fast money and the street. Aussie banks T2 spreads closed 10-15bps tighter. Over the week the ex-China moves have been dramatic. Singapore T2’s 20-35bps tighter, Thai T2’s 35-50bps; Singapore AT1’s up 0.5pt while Thai AT1’s were up as much as 3pts.

Macao SAR Government announced a list of six provisional gaming concessions on Saturday and Genting’s GMM missed out, the 10yr concessions going to the current incumbents. Following the opening of the proposals in mid-September bidders were told to up their spending proposals, specifically related to non-gaming investment. CS noted in October that they might each have to spend US$1.25bn - $2.5bn over the 10yrs.

Having rallied around 5pts last week, Genting bonds are opening 2pts higher this morning.

Most of Asian Credit is open wider today on the back of China protest headlines, dominated by fast money hedging in liquid products, but cashbonds are starting to perform as the morning progresses.

Sri Lanka is in talks with the UN Development Program (UNDP) and other agencies in an attempt to restructure its debt, trying to get $1bn of credit in exchange for restoring the country's degraded eco-system. Bonds were up last week, after the legislature approved the 2023 budget. The new spending plan includes an increase in government revenues of 63% y/y and a reduction of the fiscal deficit to 7.9% of GDP from the 9.8% this year. There is talk that the government is going to propose a 40% haircut, but it might be higher if the government decides not to restructure its domestic debt obligations.

Philippine 10yr bonds have risen 7pts this month, supported by Q3 GDP growth of 7.6% y/y which made it the 2nd fastest growing economy after Vietnam. It has benefited from a shift in manufacturing from China. At a spread of T10 +130bps it is trading alongside Uruguay, one of the tightest credits in LATAM.


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