Brekkie Bond Wrap

We saw a cautious start to the week as China’s moves to curb margin trading and facilitate short selling of stocks seemed to outweigh the RRR cut.

IG cash bond spreads were unchanged to 4 bps wider, with the China O&G space seeing decent sell interest in the 10yr part of the curve. Perhaps it was in anticipation of the SINOPEC multi-tranche USD deal that was just announced a short while ago. The Petronas complex was similarly 2-4 bps sider. Chinese IG property bonds outperformed, finishing about flat as the sector was seen to be the prime beneficiary of the RRR cut.

HY bonds were similarly softer amidst a backdrop of increasing macro noises.  Kaisa formally announced that they would not be paying the coupons the 2017 and 2018 USD bonds, triggering a default.  Bonds are opening a bit lower, around the 55-60 level, with most of the news already well-priced in.  Bumi Serpong priced USD225 mm at 6.75%, trading to a low of 99.75 in the street, and is currently wrapped around par.   Golden Agri-Resources is out with a 3-year SGD at mid-5% price guidance.