Bond Market Insights, Week Ending May 29 2022

China IG held ground this week while the aggregate yield for China HY rose to 21.4%, propelled by developer Greenland’s proposal for waivers and amendments to its 6.75% notes due 2022, including an extension of maturity, which saw trading price of Greenland bonds plummet


Huarong’s (HRINTH) USD curve, rated BBB/Baa3, outperformed after it reported that it was holding an EGM in mid-June to approve issuance of onshore undated capital bonds in an amount of up to RMB20bn.


Alibaba (A1/A+) and Baidu (A3) released results reflecting revenue growth but declining operating profit, BIDU’s drag was due to expansion into cloud and autonomous driving, BABA’s was due to losses on long-term investments.


ChemChina withdrew the redemption notice for HAOHUA 3.9 PERP (A-/Baa2) after failing to deliver the notice specified time period. The outstanding perps will step up to a coupon of T5+607.5bps from June 2.


In India Global agrochemical manufacturer UPL was hit by 7-10points as S&P cut its rating to BB+ (stable), citing a failure to de-lever, heavy utilization of off balance sheet factoring arrangements and exposure to Latin America. It now trades in line with the strongest BB names JSW Steel and Greenko.


Bharti Airtel continues to improve, Moody’s upgrading it to Baa3 (stable), it’s 3rd upgrade.


Moody’s, S&P and Fitch are all concerned for APAC and India credit. Moody’s release discussed heatwaves in India, impacting wheat production and power outages. S&P points to market volatility and Fitch to stagflation, highlighting that 1/3 of its BBB ratings attributed to corporates are at risk.


Indonesia issued a dual tranche USD3.25bn sukuk this week. INDOIS 4.4 06/06/27 at T+164 and USD1.5bn INDOIS 4.7 06/06/32 green sukuk at T+193, Books were 3x oversubscribed, both having a 20-30bps new issue concession to the existing Indonesia sukuk curve and both performed well. Export Import Bank of Thailand priced USD350m EXIMTH 3.902 06/02/27 at T+120, the scarcity of Thai paper contributed to the book being 8x oversubscribed.


First time issuer Korean Credit Guarantee Fund issued USD300m KOCRGF 3.619 05/27/25 at T+85 and more regular issuer Korea Development Bank pricing USD300m KDB 3 ⅛ 06/07/25 at T+52.5, both rated Aa2/AA. KCGF underperformed, perhaps due to a lack of familiarity with the name. The last seven Korean new issues have been from state agencies, planned corporate offerings being cancelled.


Pakistan rallied on Friday by 3 points after implementing fuel price increases, a key condition for the IMF.