Fixed Income Daily Market Update

CMBI Credit Commentary Fixed Income Daily Market Update固定收益部市场日报 The new EVRGTT 29 tightened 10bps from RO at T+160 this morning.PCORPM 7.35 Perp rose 1.5pts. QDJZWD 28 recovered 0.4pt. EHICAR 26was 0.8pt lower. We saw two-way flows skewed towards better buying onLGFVs, higher-betaCNH issues and European AT1s, but the prices werelargely unchanged. Glenn Ko, CFA高志和(852) 3657 6235glennko@cmbi.com.hk ZHHFGR:Zhuhai Huafa priced 3yr dim sum bond at 4.2% for refinancing.ZHHFGR 4.2 04/23/29 was largely unchanged amid muted flow.See below. Cyrena Ng, CPA吳蒨瑩(852) 3900 0801cyrenang@cmbi.com.hk China Economy:Q1 beat but recovery remaineduneven. CMBI expects a50bp RRR cut and a 10bp LPR cut by end-3Q26, and full-year GDP growthto slow from 5.0% in 2025 to 4.7% in 2026. See comments from CMBIeconomic research below. Yujing Zhang张钰婧(852)3900 0830zhangyujing@cmbi.com.hk Trading desk comments交易台市场观点 Yesterday,in the new issuance space,the new BBNIIJ 7.15 Perp and theUSD SOFTBK 29-36s closed 0.3-0.4pt higher. See our comments on BBNIIJon15 Apr’26. The new ALVGR 6.5Perp edged 0.3pt firmer.In Chinese IGspace, we saw profit taking on LENOVO 30-32s and AACTEC 31, though thespreads closed largely unchanged. ZHOSHK 28 traded 0.4pt higher amid RMbuying.Chinese/HK T2s CINDBK/DAHSIN/BNKEA and TW lifersFUBON/SHIKON closed up to 3bps tighter amid better buying from Chineseand Global RMs. As for higher-yielding papers in the region, NDPAPE 14Perp was 0.5pt firmer. FAEACO 12.814 Perp/MTRC 5.625 Perp/MTRC 4.875Perp edged 0.1-0.2pt higher. EHICAR 26 gained 0.4pt, while EHICAR 27 wasunchanged. In Chinese properties, FTLNHD 27-29/FUTLAN 28 were 0.1-0.5pt higher. In KR space, the recent new issues NHNCOR 31s traded 2bpstighter. The rest of the KR space was largely unchanged. RMs were buyingPOHANG but selling HYUELE. In SEAsian space, GLPSPs/PCORPM 7.35Perp were down 0.6-1.0pt. OCBCSP subs and BBLTB sub curve wereunchanged to 2bps tighter amid two-way flows. In JP space, we saw mixedtwo-way flows on MIZUHO 29-31s and better buying on FRNs ofNTT/MUFG/SUMIBK/MIZUHO. Japanese insurance subs edged 0.1-0.3pthigher despite better selling emerged in selected issues like MYLIFE 55.Yankee AT1s were overall stable. Though mildly better-selling flows occurredin the belly of the curve, the long end remained better bid by short-coveringinterests. In LGFV,QDJZWD 28 dropped another 1.3pts and QDJZWD 27s were 0.1ptlower, after the negative news headlines on the issuer’s subsidiary. We sawbetter selling from AMs and securities houses on QDJZWD USD papers,whilst their CNH counterparts remained largely stable. Last Trading Day’s Top Movers Marco News Recap宏观新闻回顾 Macro–S&P (+0.26%), Dow (+0.24%) and Nasdaq (+0.36%) were higheronThursday. US latest initial joblessclaims were +207k, lower than the market expectation of +213k. US Apr’26 Philadelphia Fed ManufacturingIndex was 26.7, higher than the market expectation of 10.3.UST yield was higher onThursday. 2/5/10/30 yearyield was at 3.78%/3.91%/4.32%/4.93%. Desk Analyst Comments分析员市场观点 ZHHFGR:Zhuhai Huafa priced 3yr dim sum bond at 4.2% for refinancing Zhuhai Huafa Group priced a new RMB500mn 3-year dim sum bond (Fitch: BBB) at 4.2%. We view thevaluation of ZHHFGR 4.2 04/23/29 as fair, in view of ZHHFGR 3.05 10/17/28 is trading at YTM of 4.0% andadjusted for c6months longer in tenor. Proceedswill be used to refinance the maturing RMB500mn dim sumbond ZHHFGR 4 ½ 04/27/26 due later this month. Thenew ZHHFGR 29 will be issued through Huafa Investment Holding 2022 I Company Limited andguaranteed fromZhuhai Huafa Group, maintaining the same structure of the maturing ZHHFGR 4 ½ 04/27/26.We view that the government support towards Zhuhai HuafaGroup is strong, underpinned byZhuhai SASAC’s93.48% and Guangdong Provincial Department of Finance’s 6.52% ownerships, respectively.Zhuhai HuafaGroup received government capital injections totaled RMB24.1bn in the forms of assets and equity during 2020-2024.These injections made up 13.9% of the total owner’s equity of Zhuhai Huafa Group as of Dec’24. InMay’25, Fitch revised the outlook of Zhuhai Huafa Group to positive from stable and affirmed the BBB rating,reflecting its strengthening position and financing role as a core government-related entity following two roundsof reforms in 2024 and 2025. Zhuhai Huafa Group is the largest state-owned platform in Zhuhai with RMB729.3bn total assets as of Dec’24.It holds a strategic infrastructure mandateby the Zhuhai Government including SZM CBD with RMB35.8bnestimated investment. The Group demonstrates business diversification beyond property developments, with45.5% of the FY24 total revenue from sales and trading of materials and commodities, 36.4% from propertydevelopments, and the remainder from urban operations and other sectors. Furthermore, Zhuhai Huafa Grouphas diversified funding channels onshore and offshore, including undrawn bank facilities of RMB256.4bn as ofMar’25. Following the redemption of ZHHFGR 2.8 1