Fixed Income Daily Market Update

CMBI Credit Commentary Fixed Income Daily Market Update固定收益部市场日报 This morning, recent KR new issues DAESEC/KOREAT tightened 2-5bpsamid better buying. TW lifers traded 3-5bps tighter. KUAISH/BABA widened1bp, while the rest of Chinese TMTs were unchanged. ZHOSHK 28 edged0.5pt higher. LASUDE 26 rose 0.9pt. GLPSPs/GLPCHI were 0.3-0.6pt lower.European AT1s were down 0.5pt. Cyrena Ng, CPA吳蒨瑩(852) 3900 0801cyrenang@cmbi.com.hk Jerry Wang王世超(852) 3761 8919jerrywang@cmbi.com.hk PTTGC:GCP mothballing as credit supportive albeit near-term earningsheadwinds. Maintain buy on PTTGC Perps, which were unchanged thismorning. See below. Yujing Zhang张钰婧(852)3900 0830zhangyujing@cmbi.com.hk CKHH:CK Hutchison entered into discussions over the potential sale of itsEurope-based beauty retailer Marionnaud. CKHHs were unchanged thismorning. Trading desk comments交易台市场观点 Yesterday,the new FUBHKL 36 tightened 6bps from RO at T+123. See ourcomments on7 Jul’26. ZHOSHK 28 stabilized and rebounded 0.4pt from theprevious 1.5pts drop, amid global real money accounts buying the dip. In KRspace, PKX/POHANG traded 2-3bps tighter, while POINTL widened 2bps.Onthe other hand,we saw better selling across lower-spread quasi-sovereign and corporateKORAIL/KORELE/KOROIL/ SKBTAM/SKONKR/HWQCUS, which closed 2-4bps wider. The rest of Asia IG space widened 1-4bps following Trump's comments that the ceasefire with Iran was over. In higher-yielding space, VEDLN 32s lost 2.8pts, and the rest of VEDLNswere 0.3-0.4pt lower. MEDCIJ 28-30/INDYIJ 29 and PTTGC/TOPTB Perpstraded 0.1-0.3pt lower. See comments on PTTGC below. GENTMK Perpswere down 0.4-0.6pt.In contrast, ACNRGY 5.1 Perp rose 0.7pt. AyalaCorporation sold 40% stake in AC Logistics to A.P. Moller Capital, aiming toexpand AC Logistics into a leading integrated logistics provider in thePhilippines by combining the two stakeholders’ expertise. InGreater Chinaspace, CWAHK 30 lost 0.1pt. Media reported China Water Affairs expectedgovernment funding to replace the water utilities firm’s capex on undergroundpipeline upgrades over the next five years. BTSDF 28 edged 0.1pt higher.See our comments on6 Jul’26. In Chinese properties, VNKRLE 27-29 weredown 0.5-0.7pt, while LNGFOR 32 edged 0.5pt higher. As for AT1s andinsurance subs, RESLIF 6.875 Perp/NOMURA 7 Perp were 0.1pt lower.HSBC Perps leaked 0.2-0.3pt. CMBI Fixed Incomefis@cmbi.com.hk Last Trading Day’s Top Movers Marco News Recap宏观新闻回顾 Macro–S&P (-0.28%), Dow (-1.09%) and Nasdaq (+0.20%) were mixed on Wednesday. The US latest CrudeOil Inventories increased by 2.998mn barrels to 411.3mn barrels, compared to the market expectation of adecreaseof 1.900mn barrels.UST yield were higher on Wednesday.2/5/10/30 year yield was at4.21%/4.31%/4.56%/5.06%. Desk Analyst Comments分析员市场观点 PTTGC: GCP mothballing as credit supportive albeit near-term earnings headwinds We maintain buy on PTTGC 6.5 Perp and PTTGC 7.125 Perp for decent carry in PTTGC curve. PTTGC 6.5Perp offers a yield pick-up of c130bps over its senior PTTGC 31 with 3 months shorter in “tenor”, as well asc20bps over TOPTB 6.1 Perp (first coupon reset in Apr’31).PTTGC 7.125 Perp is trading as the highestyielding paper within the PTTGC curve.Despite the coupon of the perps will only be reset with minimal step-ups, we believe that PTT Global Chemical (PTTGC) remains incentivized to call and replace the perps topreserve the hybrid market access and equity credit recognition. Yesterday, PTTGC approved a restructuring of GC Polyols Company (GCP), alongside increasing itsequitystake to 100% from 82.1% via the acquisition of shares from Sanyo Chemical Industries (14.9%) and ToyotaTsusho (3.0%). Full ownership provides PTTGC with complete operational flexibility to execute its strategy tomothball the polyols plant, whilemaintaining the facility in a state of operational readiness for a potential marketrecovery. We view the decision to mothball GCP as credit supportive, albeit with near-term earnings and cash flowheadwinds. The move halts ongoing operating losses at GCP and prevents further cash drain. Due to persistentglobal oversupply and weak downstream demand for polyols, PTTGC has recognized assets impairment lossesrelated to GCP totaled THB7.1bn in FY25 and 1Q26 at consolidated level, which should limit furtherdownsidefrom an asset valuation perspective. While the THB1.8bn restructuring provision booked in Jun’26 will weighon near-term earnings and operating cash flow, the restructuring caps further losses and improves earningsvisibility. Over the medium term, the removal of a negative EBITDA contributor, i.e. GCP, should supportPTTGC’s profitability and facilitate gradual improvement in its leverage metrics. That said, the step-up to 100% ownership implies incremental cash outflow and full consolidation of GCP’s liabilities, while PTTGC will alsoneed to bear any future restart costs in full should market conditions improve. Operationally, GCP produces polyols and polyurethane (PU) system