Fixed Income Daily Market Update

CMBI Credit Commentary Fixed Income Daily Market Update固定收益部市场日报 This morning, the new FUBHKL 36 tightened up to 7bps from RO at T+123.Seeour comments on the FV estimateyesterday. ZHOSHK 28 stabilized andedged 0.5pt higher amid global money buying. NTT FRNs traded unchangedin spreads amid better selling. The rest of Asian IG credits were 1-2bps tighter.LASUDE 26/EHICAR 26 were 0.4pt higher. SOFTBK 65 was down 0.4pt. Cyrena Ng, CPA吳蒨瑩(852) 3900 0801cyrenang@cmbi.com.hk Jerry Wang王世超(852) 3761 8919jerrywang@cmbi.com.hk Quickthought on Southbound Bond Connect expansion:Annualinvestment quota increase to RMB800bn. See below. Yujing Zhang张钰婧(852)3900 0830zhangyujing@cmbi.com.hk CWAHK:Media reported China Water Affairs expects government fundingto replace the water utilities firm’s capex on underground pipeline upgradesover the next five years. CWAHK 30 was unchanged this morning. Trading desk comments交易台市场观点  Yesterday,Fubon Bank (HK) priced thenew 10NC5 T2 USD issue at T+123,tightened from IPT at T+160 on a strong order book of over USD1.5bn whilethe issue size capped at USD300mn. See our FV estimate in our dailyyesterday.The new KOEWPW 32 was unchanged from RO at T+58. Thenew KOREAT 30s tightened 1bp from RO at T+55 amid small better buyingfromAMs.In secondary KR IG space,HYNMTR/HYUELE/LGENSO/POHANG closed 1-2bps tighter, while NHSECS/DAESEC traded 1-2bpswider amid profit-taking flows from AMs. In JP space, SUMIBK/MIZUHO/NTTFRNs retraced 1-2bps wider.In SE Asia,ADVANC 31-36s/PETMK and thebellyof EXIMBK widened 2-5bps.Chinese TMTs BABA/TENCNT/KUAISH/MEITUA/XIAOMI widened 1-2bps. Tencent reduced its stake inKuaishou to c9.4% from c15.7% and ceased to be a substantial shareholder.ZHOSHK dropped 1.6pts. In higher-yielding space, VEDLN 30s dropped 3.4pts, and the rest of VEDLNswere 0.2pt lower to 0.2pt higher. GLPSPs/GLPCHI closed 0.4pt lower to 0.5pthigher. WESCHI 28-29 were down 0.1-0.4pt. In HK/Chinese properties,FAEACO 12.814 Perp edged 0.5pt higher. There were market chatters thatFar East Consortium will launch a bondholder-friendly LME. ROADKGs were0.4-0.5pt higher. CMBI Fixed Incomefis@cmbi.com.hk Last Trading Day’s Top Movers Marco News Recap宏观新闻回顾 Macro–S&P (-0.45%), Dow (-0.25%)and Nasdaq (-1.16%) were lower on Tuesday.UST yield were higher onTuesday. 2/5/10/30 year yield was at 4.19%/4.27%/4.55%/5.05%. Desk Analyst Comments分析员市场观点 Quickthought on Southbound Bond Connect expansion:Annual investment quota increase toRMB800bn The PBOC, HKMA and SFC announced enhancement measures under Southbound BondConnect, includinglifting the annual investment quota to RMB800bn from RMB500bn, the development of a bond repurchasebusiness using Southbound Bond Connect bonds as collateral, and the expansion of the product scope toinclude products with HKD and CNH bonds as underlying assets. We believe the quota expansion will strengthen technical demand for offshore CNH bonds. The investoruniversehas been widened beyond banks to include insurers,securities firms,fund managers andwealth-management institutions,with some larger insurance companies reportedly starting to invest in CNHbonds via Southbound Bond Connect in Jun’26. These NBFIs are generally more flexible in allocating tonon-SOE and non-China credits compared with banks, as they are less bound by lending-relationshipconstraints. In our view, non-SOE Chinese IG credits are likely to be the key near-term beneficiaries. We also expect the broader investor base and higher quota to attract more issuers, both onshore andnon-Chinese, to refinance in theCNH bond market, taking advantage of higher demand and potentially lowerall-in funding costs compared to USD. In 1H26, gross CNH bond issuance increased 32.6% yoy to RMB582.8bn.We expect gross CNH bond issuance continues to increase in 2H26, alongside amore diverse issuer mix andwider investor participation. Debut issues from Kuaishou Technology, JD.com, Sunny Optical, and SingaporeAirlines in 1H26 further demonstrate the ongoing sector and regional diversification in the CNH bond market. Offshore Asia New Issues (Priced) Offshore Asia New Issues (Pipeline) News and market color Regardingonshore primary issuances, there were 119 credit bonds issued yesterday with an amount ofRMB136bn. As for month-to-date, 388 credit bonds were issued with a totalamount of RMB376bn raised,representing a 18.9% yoy increase [BBNIIJ]The Indonesian sovereign wealth fund Danantara will merge the asset management units ofBRI, BNI,Bank Mandiriand PNM, surviving entity will be Mandiri Manajemen Investasi [LGELEC]LG Electronics 1H26 sales rose 9.4% yoy to KRW47.6tn (cUSD31bn) [VNKRLE]Vanke Hong Kong has sold around 80% of its 1,650 units at Le Mont project in Tai Po, HongKong Fixed Income DepartmentTel: 852 3657 6235/ 852 3900 0801fis@cmbi.com.hk Author CertificationThe author who is primary responsible for the content of this research report, in whole or in part, certifies that with respect to the securiti