Fixed Income Daily Market Update

CMBI Credit Commentary Fixed Income Daily Market Update固定收益部市场日报 The new SHUGRP 4.5 04/23/29 was down 0.5pt from RO at par this morning.Seeour comments on the FV yesterday.Chinese TMTs MEITUA/KUAISH/LENOVO tightened 3-5bps amid active two-way flows. The recentnew issue EVRGTT 5.25 04/23/29 was 3bps tighter. KR corporate IG creditstraded 1-2bps tighter. SOFTBKs gained 0.3-1.0pt. VNKRLE 27’ and 29’leaked 0.5-0.6pt. Glenn Ko, CFA高志和(852) 3657 6235glennko@cmbi.com.hk Cyrena Ng, CPA吳蒨瑩(852) 3900 0801cyrenang@cmbi.com.hk FAEACO:Thoughts on distribution deferral and potential LME. FAEACO12.814 Perp rose 0.9pt yesterday and edged 0.5pt higher this morning. Seebelow. LNGFOR:Media report thatLongfor plans to reapply for RMB5bn onshoreissuance after terminating it last week, to refinance onshorebonds maturingbetween Mar’27 and Jan’28. LNGFOR 27-32 were unchanged to 0.1pthigher this morning. Yujing Zhang张钰婧(852)3900 0830zhangyujing@cmbi.com.hk Trading desk comments交易台市场观点  Yesterday,FAEACO 12.814 Perp led the space and rose 0.9pt. See ourthoughts below on FEC distribution deferral and potential LME. LIHHK 26edged 0.1pt higher. Lifestyle announced that owner Lau Luen Hung willrepurchase all outstanding LIHHK 4.8 06/18/26 at par. Taiwanese liferstightened 1–2bps amid buying flows into NSINTW and SHIKON. ChineseTMT names AACTEC/MEITUA/LENOVO tightened 1-2bps amid two-wayactivities. ZHOSHK 28 was largely unchanged with modest better buying.SHUGRP 27 was 0.1pt lower. Shuifa Group priced the new SHUGRP 29 at4.5%. We view the FV to be high 4%. See our commentsyesterday. InChinese properties, LNGFOR 27-32 were 0.1pt lower to 0.3pt higher. Mediareport that Longfor plans to reapply for RMB5bn onshore issuance afterterminating it last week, to refinance onshore bonds maturing betweenMar’27 and Jan’28. VNKRLE 27’ and 29’ lost 0.5pt. In KR space, profit-takingemerged on short-dated DAESEC and HYUELE, while more selling pressureappeared for 5yr fixed HYNMTR issues and FRN tranches. In SE Asianspace, bank T2s closed largely unchanged. We saw profit-taking flows onOCBCSP and BBLTB, and better selling on MAYMK FRNs and AHBMKsenior papers. TOPTB/PTTGC Perps were 0.1pt firmer. VEDLN 28-33s were0.1pt lower to 0.1pt higher. In JP space, we saw balanced two-way flows onNTT/SMBCAC/NOMURA,and the space closed largely unchanged.Japanese insurance hybrids and AT1s gained 0.3pt thanks to better buyingfrom local JP accounts. Incontrast, their Yankee counterparts closed roughlyunchanged. In LGFV space, RMs were buying higher-yielding names across CNH andUSD issues, driving these bonds 0.3pt higher. In particularly, QDJZWD 7.906/04/27 recovered c30bps amidbetter buying. Last Trading Day’s Top Movers Marco News Recap宏观新闻回顾 Macro–S&P (-0.24%), Dow (-0.01%) and Nasdaq(-0.26%) were lower on Monday.2yr/5yr UST yield werehigher on Monday. 2/5/10/30 year yield was at 3.72%/3.86%/4.26%/4.88%. Desk Analyst Comments分析员市场观点 FAEACO:Thoughts on distribution deferral and potential LME Earlier this month,Far East Consortium (FEC) announced to defer the distribution of FAEACO 12.814 PERPscheduledon 18 Apr’26 to the next distribution date.The deferral was a downside surprise taking cues fromthe non-core asset disposals totaling cUSD150mn announced and the receipt of net proceeds from thosedisposals totaling cUSD53mn since Dec’25 (compared withthe distribution of USD23.1mn scheduled in Apr’26).Furthermore, we understand that FEC remains on track to collect cash proceeds of HKD900mn-1bn (USD115-128mn) over 2-3Q26 from the delivery of Tower A of Victoria Riverside in Manchester City of the UK. We note various media reports on the potential exchange of perp into a bullet bond and we do believe that FEChas a strong incentive to relieve the high cash distribution of FAEACO 12.814 PERP.Nonetheless, deferringcoupon will refrain FEC from paying dividend to shareholders and taking advantage of the market condition tobuy back the perp at well-below par. In our opinion, repurchasing FAEACO 12.814 PERP at discount remainsone of the most efficient ways to relieve the high distribution payments and deleverage given the exceptionalgain from repurchases. Additionally, we also see the Chiu family’s strong willingness to support as evidenced by being a ready buyerfor FEC’s asset disposals at above BVs. Since Dec’25, FEC announced the sales of PlazaDamas and 49.9%stakes in Ritz Carlton Melbourne to Chiu family for considerations totaling cUSD53mn (c36% of total netproceeds for non-core asset disposals announced over the period) and exceptional gain of cUSD22mn. So far,FEC has received cash proceeds of cUSD13mn. Hence, we envisage that holders of FAEACO 12.814 PERP are not in rush to accept distressed exchange witha significant principal haircut as FEC’s financial and liquidity profiles are not in distress. Any LMEs on the perp,in our opinion, will have to be conducted in a friendly and consensual manner to minimize the hold-out.Otherwise, the high distributio