Bondcritic

Reuters reported that China’s State Council asked the Guangdong government to arrange the rescue of Country Garden. Ping An’s spokesperson said the company had not been approached by the government. There is also no guarantee on when bondholders will...

STARK Corporation (STARK TB) (Stark) defaulted on its interest payments on 2-June, leading to a default event. Stark’s default has exposed the structural weakness in the Thai bond market which is worth discussion. We do not believe there is a reasona...

Country Garden should not be a surprise. The bond price at 5 cents is based on much uncertainty. We list a few caveats why the bonds at 5 cents are not investible. The potential wind-up order by the Hong Kong court will be a big test of the rule of l...

Our thesis has not changed though the Fed appears to be more hawkish than many investors thought. We expect countries with lagging rate cycles, such as China and Thailand, to suffer capital outflows and rising yields. In Asia, the spotlights remain o...

We are now in late July and Thailand still does not have a new Prime Minister (PM) yet. We believe the future is very uncertain from now until next May when the senate power to elect the PM ends. Our view toward any Thai assets remain negative in the...

Thailand finally has Mr. Sretha Thavisin as the 30th Prime Minister (PM) of Thailand on 22-August. The PTP decided to betray its voters to cross the aisle to join the conservative side. We believe the potential surge in the Thai stock performance sh...

Going into a third week after the general election on May 14th, uncertainty remains over the government coalition. We believe the Move Forward Party (MFP)’s victory signifies a movement to reform, not just a political campaign. The muddle-through sce...

10 months + since Russia invaded Ukraine and there is yet no end to the war in sight. The negative 2/10 spread generates a conviction that the world is heading into recession next year. Inflation could slow down. Slower than expected rate hikes prov...

It has been 2 years since we cautioned our readers on the Good, the Bad, and the Ugly of COVID-19. Inflation started last year with the supply chain problems as the world seemed to get used to living with COVID-19. The war came in at the right time to boost inflation further on rising commodity prices. In addition to arms races, we believe the stand-off will lead to inefficient production and rising cost of production in general. This will be a dilemma for the world’s central banks to stimulate the economy, as rate hikes will stun growth but persistently low rates will allow inflation to rise even higher.

Here we summarize frequently asked questions (FAQs) we were asked in our recent press interviews during the past 2-3 weeks on China Evergrande Group (Evergrande) and our prediction for the bondholders of the EVERRE complex. Our view is that Evergrande is never grand and those who have analyzed the company are not surprised by what happened. Rather, the crisis has involved investors’ assumptions on Evergrande that evolved from the presumption that the Chinese government will step in to support the company on the basis of systemic importance to the Chinese economy. The EVERRE complex prices have dropped to as low as 22 cents on the dollar.

We are launching coverage of debt tokens with SIRIHUB, Thailand’s first investment token. We believe XSpring Digital will need to revise its token prospectus in July. We see both SIRIHUB-A and SIRIHUB-B as unattractive at the current offering despite...

ESG bonds comprise green, social, and sustainability bonds which comply with the Green Bond Standards (GBP) and/or the Social Bond Standards (SBP) (See Social Bond Principles below). Green bonds issuance, with their detailed taxonomy, have steadily increased since 2018 (EXHIBIT 1) in Asia. In our view, ESG investing started taking shape in January 2004 when the United Nations asked major financial institutions to integrate ESG into capital markets. We believe the social bond rating is the most objective solution to judge which social bonds contribute more to social development.

We initiate our coverage of Thailand’s Thai Baht (THB)-denominated corporate bond market. As a result, we aim to cover Thailand’s THB corporate bond market rated A+/A+(Tha) or lower on a national scale by TRIS Ratings and/or Fitch Ratings (Thailand) as well as unrated bonds issued through both public offering and private placements as long as we can obtain sufficient public material information to make recommendations. EXHIBIT 2: THB Bonds vs. EXHIBIT 3: SGD Bonds vs. Government bonds and treasury bills accounted for 69.8% of total THB bonds outstanding as of 18-March, followed by corporate bonds (24.8%).

Asset sales have slowed due to a Covid-19 impact on the valuation of travel-related assets but the effort was on-going with financial support from Chinese banks, especially China Development Bank. The bankruptcy notice on 29-Jan proved that asset sales, credit facilities, and new management set up by the provincial government are simply not sufficient to keep HNA afloat. Hence, even at 30c on the dollar, we cannot recommend buying HNA-related bonds including both SANYPH 10/21s and HONAIR Perp. The event is still a surprise to us despite what HNA has been through since late 2017.

An IABS transaction involves a sponsor and/or manager sourcing project and infrastructure loans from originators (i.e. banks), underwriting them and issuing securitized notes backed by these assets to investors. It should be noted that such risks are generally taken into consideration in the ratings process of IABS, either through the credit estimate (i.e. private ratings) assigned to the underlying loans or the stress testing of the loan portfolio and IABS structure. Project and infrastructure loans contained in IABS offer investors more consistent cashflows compared to corporate loans - especially in times of crises such as the current COVID-19 pandemic.

One piece of good news since we last wrote about Parkway Pantai in July is that the first COVID19 vaccine by Pfizer has been rolled out at the time of this writing and several potential candidates in the final phases of testing are also waiting to be approved for mass production. Its key Singapore and Malaysian markets have seen occupancy rebounding to above 50% in 3Q20. Malaysia has also seen a resurgent of COVID19 cases after 3Q but management is confident that the impact will not be as bad as in 2Q. PARKPT 4.25% 7/22c traded at an attractive YTM of 5.58% at the time of writing compared to other local Healthcare bonds.