Fixed Income Daily Market Update

CMBI Credit Commentary Fixed Income Daily Market Update固定收益部市场日报 The new SHUION 9.75 01/26/29 was up 0.3pt from RO at 98.423 thismorning. Asian FRNs were 1-2bps wider, while Asian fixed-rate IG bondswere 1-3bps tighter. KUAISH 31-36s tightened by 2bps. VLLPM 29 was0.7pt lower. EHICAR 27-29 recovered 0.9pt. Glenn Ko, CFA高志和(852) 3657 6235glennko@cmbi.com.hk CHIOIL:FV of the new CHIOIL 29 to be high-6% vs IPT at 7.25%. See below. Cyrena Ng, CPA吳蒨瑩(852) 3900 0801cyrenang@cmbi.com.hk China Economy:Weakening growth may prompt policy easing. CMBIexpects a 50bp cut in RRR and a 10bp cut in LPR in 1Q26, followed by anadditional 10bp LPR cut in 3Q26, while broad-fiscal deficit should remainalmost flat at 8.5% in 2026; full-year GDP growth rate may decline from 5%in 2025to 4.8% in 2026. See comments from CMBI economic researchbelow. Yujing Zhang张钰婧(852)3900 0830zhangyujing@cmbi.com.hk Trading desk comments交易台市场观点 Yesterday,the recent new issue KUAISH 31s closed unchanged, whileKUAISH 36s widened by 1bp. MEITUA 28-35s were unchanged to 3bpswider. Chinese/HK beta names ZHOSHK/FRESHK and bank T2s BNKEA32-34s weresought after by AMs/PBs in small sizes and closed 1-7bpstighter. NWDEVL Perps/VDNWDL Perps surged 0.4-8.3pts. NWD sharesjumped 16% to a two-year high after media reported that Chow Tai FookEnterprises might boost support for NWD. FAEACO 12.814 Perp/LASUDE26 increased by another 0.6pt. CHIOIL 26 also edged 0.6pt higher.China Oiland Gas proposed to issue new USD 3NC2 bond to fund the concurrenttender offer for CHIOIL 26. See our comments below.EHICAR 26-27dropped 1.0-1.5pts.In Chinese properties, SHUION 26 gained 2.0pt. Seecommentsyesterday. FUTLAN 28/FTLNHD 26-27 rose 0.5-1.4pts. DALWAN28 was up by 0.4pt. On the other hand, LNGFOR 27-32 were down by 0.2-0.9pts. VNKRLE 27-29 retraced 0.6pt.In KR space, recent new issuesPOHANG/SKBTAM were 1-2bps wider amid profit-taking flow.In JP space,MUFG 32-37s/TACHEM 35/NTT 35 softened to 2-5bps wider. SOFTBK 65was 0.9pt lower.In SE Asia space, BBLTB T2s widened by 1-3bps. ACENPM4 Perp lost 0.9pt. VEDLN 28-33s/SMCGL Perps were down by 0.1-0.4pt. TheReNew Energy complex were 0.4pt lower to 0.1pt higher. ReNew EnergyGlobal mandated new USD bonds issuance to refinance RNW 7.95 07/28/26of USD525mn. INDYIJ 29s/MEDCIJ 26-30s were unchanged to 0.1pt lower.GLPSPs gained 0.1-0.3pt. In the Middle East, SNBAB 6.15 Perp lost 0.1pt.In LGFV space, HUXJDP 2.65 10/27/26 was 1.0pt lower. Last Trading Day’s Top Movers Marco News Recap宏观新闻回顾 Macro–US Stock markets were closed on Monday due to Martin Luther King Jr. Day.UST yieldwas unchangedon Monday. 2/5/10/30 year yield was at 3.59%/3.82%/4.24%/4.83%. Desk Analyst Comments分析员市场观点 CHIOIL:FV of the new CHIOIL 29 to be high-6% vs IPT at 7.25% China Oil & Gas Group (0603.HK, CHIOIL)proposes to issue 3NC2 Reg S USD senior bond (Ba3/BB/-). Thenew CHIOIL 29 will be guaranteed by certain non-PRC incorporated subsidiaries, with share pledges of theoffshore initial subsidiary guarantors subject to release conditions. Weview the FV of new CHIOIL 29 to behigh-6% vs IPT at 7.25%, taking cuesfrom the valuation of other Chinese HY peers in utility sector such asCWAHK 5.875 10/22/30 (Ba1/BB+/-) which is trading at YTW of 6.4% and adjusted for the rating and tenordifferential. The net proceeds from the new bond will be used to fund the concurrent tender offer for CHIOIL 4.7 06/30/26of USD361mn and for general corporate purposes. The tender price is at par, CHIOIL will accept up to the lowerof the o/s principal amount of CHIOIL 26 and the new issue amount. CHIOIL may prioritize to accept the amounttendered from holders who subscribe the new bond, and intends to prioritize the allocation of the new bond tothe holder of CHIOIL 26 who tendered their bonds. Settlement of the tender offer is conditional upon thesettlement of the new bond issuance. CHIOIL is China’s 7thlargest downstream natural gas player, with a 9.6% market share in 2024 based on annualnatural gas sales volume. It supplies natural gas to end customers through its self-owned natural gas branchpipelines and city-gas distribution networks, supported by 71 city-gas concession rights across 13 provinces.CHIOIL also has upstream exposure through oil and gas production in Canada via Baccalieu Energy Inc., whichit acquired in 2014. In FY24, CHIOIL generated revenue of HKD17.7bn, comprising 79% from sales and distribution of natural gasand related products, 15% from production and sales of coal-derived clean energy and related products, andthe remaining 6% split evenly between (i)exploitation and production of crude oil and natural gas and (ii) gaspipeline connection and construction services income. In FY24, CHIOIL sold 7.3bn m3) of gas in China andproduced 5,082 boe/day of oil and gas in Canada. In FY24, CHIOIL generated gross profit of HKD2.2bn with a gross margin of 12% which is broadly unchangedsince 2022. FY24 EBITDA was HKD2.0bn with an EBITDA margin of 12%, compared to 9% in F