Fixed Income Daily Market Update

CMBI Credit Commentary Fixed Income Daily Market Update固定收益部市场日报 The new CDBALF 4.25 02/11/31 was largely unchanged around pricing atT+50 this morning. See our commentsyesterday.PMBROV 30/BSFR 6.375Perp edged 0.3-0.4pt higher. ACPM 4.85 Perp/EHICAR 26 were 0.9-1.2ptslower. Glenn Ko, CFA高志和(852) 36576235glennko@cmbi.com.hk FRESHK:An unconvincing rating action. FRESHKs were unchanged thismorning. See below. Cyrena Ng, CPA吳蒨瑩(852) 3900 0801cyrenang@cmbi.com.hk GLPSP/GLPCHI:GLP Pte circulated 8.95% guidance for its USD500mn tapof GLPSP 9.75 05/20/28. Concurrently, GLP China launched a tender offerfor all of the o/s USD495mn GLPCHI 2.95 03/29/26 at par. GLPCHI 26 was0.5pt higher this morning, while GLPCHI 29/GLPSP 28/GLPSP Perps were0.5-1.0pt lower. Yujing Zhang张钰婧(852)3900 0830zhangyujing@cmbi.com.hk Trading desk comments交易台市场观点 Yesterday,the new INTNED 6.5 perptraded 0.2-0.3pt lower from RO at paramid mixed flows. Yankee AT1 space was unchanged to 0.3pt weaker. InChinese IG space,short-end MEITUA tightened 2-4bps, while belly to longend MEITUA were unchanged to 2bps wider. CCAMCL/ORIEAS were 1-3bpstighter.ZHOSHK 28 closed 2bps tighter. FRESHK 28-29 widened 25-55bpsandCNH FRESHK 28 closed 2.0pts lower amid one-way selling by AMs.S&P placed Far East Horizon on CreditWatch negative after the profitwarning of its 41.7%-owned subsidiary Horizon ConstructionDevelopment.See comments below. EHICAR 26 decreased by 1.3pts. In HK, FAEACO12.814 Perp/MTRC 4.875 Perp were 0.1pt lower. SUNHKC 29 closed 0.1pthigher. The Macau gaming complex were unchanged to 0.1pt higher. Seeour comments on3 Feb’26. In Chinese properties, FUTLAN 28/FTLNHD 26-27 edged 0.6-1.3pts higher. Seazen will hold non-deal roadshows during 9-10 Feb’26 in Hong Kong. VNKRLE27-29 were 1.0pt lower. In JP space, NTT35/MUFG 35-36s/SOBKCO 35/SMBCAC 35/TACHEM 35 traded 1-3bpswider.RESLIF 6.875 Perp was 0.1pt higher.In SE Asian space,BBLTB/OCBCSP T2s were 2bps tighter to 1bp wider. VLLPM 27-29 dropped1.8-2.3pts. GLPSP Perps closed 0.1pt lower. In the Middle East, belly ofARAMCO tightened 1-3bps while the long-end widened 1-3bps. LGFV space remained firm especially among CNH issues across the curve,papers yielding from lower than 3% or higher than 7% remained largely wellbid, whereas flows were stable two way in USD issues. Last Trading Day’s Top Movers Marco News Recap宏观新闻回顾 Macro–S&P (-0.51%), Dow (+0.53%) and Nasdaq (-1.51%) were mixed on Wednesday. US Jan’26 ADPnonfarm employmentwas+22k, lower than the market expectation of +46k. US Jan’26 ISM Non-ManufacturingPrices/PMI was 66.6/53.8, respectively, higher than the market expectation of 65.0/53.5. 10/30 year UST yieldwas higher on Wednesday. 2/5/10/30 year yield was at 3.57%/3.83%/4.29%/4.91%. Desk Analyst Comments分析员市场观点 FRESHK:An unconvincing rating action S&P placed Far East Horizon (FEH)’s BBB-rating on CreditWatch with negative implications, following HorizonConstruction Development's (HCD, 9930.HK) recent profit warning, indicating a 70%-90% yoy decrease in profitattributable to shareholders in FY25. HCD is a listed subsidiary of FEH, which holds a 41.7% stake. HCDspecializes in engineering and construction services and equipment leasing which are affected by challengingconditions in China's construction sector amid a prolonged downturn in the property market. We estimatedHCD’s revenue, gross profit, and PBT represented c25%, c12% and c1% of FEH in 1H25, respectively. We are not convinced about the rating action given the apparently small impact on FEH’s PBT. As per FEH, ithas restructured HCD-related businesses in response to cyclical volatility in the construction sector, while itscore financial leasing businesses remain resilient. FEH expects net profit to remain broadly stable, with theprofitability of its principal businesses not materially affected by HCD. Asset quality has remained stable,supported by sufficient provisioning buffers. FEH also believes it has sufficient capacity to withstand the cyclicalweakness at subsidiaries without impairing group-wide debt-servicing capability. FEH has good access to diversified onshore and offshore funding channels, supporting its refinancing needs.In 2025, FEH raised bonds in HKD, JPY, RMB and HKD totaled cUSD3.2bn.We also take some comfort thatFEH’s key relationship banks have maintained credit lines to FEH and HCD following the 1H25 results andFY25 profit warning of HCD, as well as the negative rating action. That said, we are monitoring HCD’srefinancing progress, given cRMB6bn of short-term debt maturities in 2026. We maintain buy on FRESHK 26-29. In our view, FRESHKs offer more attractive risk-return profiles than otherleasing peers such as BOCAVI 26-29s (YTM of 4.0-4.2%). The yield pick-up sufficiently compensates for the 3notches lower in rating, partly due to the stronger shareholding background.We like FEH’s more diversifiedoperations compared with those of other Chinese commercial leasing peers.Yesterday, FRESHK 28-29widened