Brekkie Bond Wrap

Some major developments in the Kai-saga emerged as founder Kwok Ying Shing has returned to helm the troubled Chinese developer three months after he resigned amid a corruption probe. The Kaisa complex jumped as much as 7 points (still trading flat of accrued) on this news on hopes that Kwok and his company have mended relations with the Shenzhen government, and that we are closer to drawing a line under the mess. Somehow, with the deadline for the payment on Kaisa’s USD bonds coming up later this month, I feel that we have not seen the last of the drama surrounding the company.

Elsewhere, Chinese property bonds were bid to the sky, underpinned by the monster rally in HK stocks, as H shares finally played catch up to their A-counterparts. We are up to 3 points higher over the past week, and are close to the highs seen last year in this space, but I still see room for this party to continue as the primary pipeline continues to be light, while the hunt for yield shows no signs of abating. Having said that, I would not be surprised to see some issuers starting to do some opportunistic issuing at these levels, given how much we have tightened this year. Good luck!