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Bond Market Insights - Tuesday 21 Jun 2022

China High Yield Property continues to trade heavily despite talk of strong June property sales and a potential stimulus package which have been stimulating equities. Macau gaming names were 3-5 pts lower on newly found covid cases and China industrial names were fairly unchanged while FOSUNI initially rallied 4 points after the tender announcement, only to be hit aggressively to close 5-7pts on the day. This dragged down the rest of the industrial space, which fell 2-3points. Today (Tuesday) Fosun is down another 3-6pt, while fast money is intent on shorting the industrial sector. FOSUN 5.95% 25 is priced around 60.00, yielding 24%, down 21pts in a week.

Korea Western Power issued a 3y Green bond, financing projects in accordance with the company’s Green and Sustainability framework, and a number of other are in the pipeline which are expected to continue the trend of coming cheap and probably trading well in secondary, There was better buying of recent Korean issues today despite the new deals coming with cheap IPG.

LATAM markets are also under pressure with Argentina CDS hitting new highs as the central bank lifts rates to 52% and annual inflation hits 61%, Battling to maintain positive real interest rates, a condition of the $44bn IMF debt program.

Ecuadorian bonds were hit as the streets were rocked by violent street protests, reminiscent of the violence that precipitated the debt restructuring in 2020. Ecuador's debt service is much smaller now. One of the real issues is what is the president going to do with the $2 billion windfall the country has received from higher commodity prices.



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