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Bond Market Insights - Week Ending June 24 2022

Investors are looking for safe havens and on Friday and both China and India IG were firm while the HY sectors were unstable. Gemdale and Greentown China Holdings were down between 5pts and 15pts at one point, with Chinese accounts selling 2024/25’s. Times China Holdings fell another 2pts to 5pts after the 10pt drop on Thursday, following the media report that company is in talks with onshore private bond holders to discourage the exercising of puts in August. The rest of the sector was down 2-3pts.

Fosun squeezed 5pts on the back private banking and real money interest.

In March 2022 Fosun reported strong revenue growth of 24% y/y to CNY90.9bn for 2H21. The growth was led by the Health (+38% y/y) and Happiness (+32% y/y) departments. That investor happiness has evaporated somewhat. The Asia HY event this week was the “Fall and Rise of Fosun”, affecting $5bn of bonds. Moody’s put Fosun on review for downgrade on June 14th, citing liquidity concerns in the face of a heavy redemption schedule this year. Investors dashed for the exits, which were few given the current lack of liquidity in all markets.

The rest of the China Industrial, BB rated sector held in well, trading in line with US and other Asia BB industrials.

India HY dropped 3pts initially with dealers trying to make space for the sellers that still abound, the move reversed as real money emerged grabbed bargains.

A steering committee of Sri Lanka bondholders has formed, led by Amundi, BlackRock, Eaton Vance and the big guys. Sri Lanka's government and the IMF team started bailout negotiations as the country scrambles to receive new fuel shipments. Sri Lanka is hoping to have a debt restructuring framework by end-July. The country will also set up a donor’s conference with China, India, and Japan to seek more foreign aid amid a worsening economic crisis. In the meanwhile Sri Lanka has been sued in New York federal court by Hamilton Reserve Bank, which holds over US$250mm of the defaulted 5.875% 7/2022.


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