Brekkie Bond Wrap

The Asian credit market started the week on a weak note as the broader markets struggled.  There was some light net selling across the credit space, though it was concentrated in specific sectors.

In IG, there was decent selling across the low beta benchmarks like the SOEs, oil majors and Petronas curve.  Tech bonds were 1-2 bps wider with the recent Huawei 4 bps wider.  Price action in the BBBs was more mixed.  Noble and the Chinese Asset Management Companies (AMC) saw some bottom fishing after hitting recent wides, but the IG property sector remains well offered.

In HY, the Chinese names held up well, without any significant selling interest.  Away from that, sentiment was weak in the Indonesian, Indian and peripheral corporates.

The only notable new issue yesterday was Zhongrong International (BB) which sold US$225mm bonds at 6%.  Order book was close to US$600mm.  Unsurprisingly, PBs were the biggest participants in the deal.  This is the trust company’s debut USD issue which followed a decision to obtain a BB rating from S&P.  While not an easy credit to understand, the bond does come with a CoC put and a one-period interest account despite the shadow banking connotation.