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Bond Market Insights - Thurs, Jun 23 2022

China IG saw better buyers, pulling leasing companies and senior bank debt 2-3bps tighter. Long end TMT was still heavy, the licensing news barely lifting Alibaba. Perps and AT1 heavy were also sluggish with real money selling bounces. China Light and Power (CHINLP) slid another 0.5pt following the profit warning and some power outages in HK. Its stock is down 10% over the last 3 sessions.

Country Garden has joined the ranks of high yield as their senior unsecured rating was downgraded to Ba1 by Moody’s, their bonds remained unchanged on small two-way flow, while CIFIHG and the other higher priced names were hit down 1-2pts. Among the single B’s Times China Holdings, TPHL, was down 2-4pts. Macau gaming resumed its decline after a day’s respite, down 1-3pts on a covid situation.

Fitch was also out with a red pen. Guangzhou R&F downgraded by three notches to C on the distressed debt exchange, while Hong Yang and Redsun were downgraded to B- on decreasing liquidity headroom and heightened refinancing risk. Sunac is talking of further extensions of the CNY 4bn of notes originally due on April 1st, while still seeking funds for the 30 June amortization. Onshore bonds fell as much as 16% on the news

On the new issue front supernationals were in the news. Inter-American Development Bank priced a $2bn 2 year with a 3.25% coupon at mid-swaps +5, while Asian Infrastructure Investment Bank, also AAA, paid MS +38 for $1.25bn 3yr sustainable bonds with a coupon of 3.375%.

Bank of East Asia (Baa2) mandated banks for loss absorbing notes (TLAC) with a six year maturity and not callable until year 5 (6NC5 in bond vernacular) there has been good interest despite only being $300mm.


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