Treasury 10-year yields were 5bp lower as markets reacted positively to the fact, that so far, the new U.S. administration hasn’t introduced any China specific tariffs that could stoke inflation, perhaps signaling a more constructive discussion on trade. In terms of Emerging market Asia, the Bloomberg Asia Emerging USD Bond index is little changed with an index Z-spread of 123bp.
In terms of news flow, the CEO of Philippines telecom company, Global Telecom, discussed publicly the potential uses of any IPO cash (e.g. expand lending business), but we remind investors that the company only recently stated (10th Jan.) that even if they’re ready to IPO, no decisions have been made. We also saw a new issue from another Philippines company, Rizal Commercial Banking, who are coming with a 5yr & 1 day benchmark at an IPT of T+145, we see fair value at T+105bp.
Finally, in China real estate, there were more downgrades for Vanke (S&P to B-, Fitch to CCC+), but market brushed the news off and focused on a statement confirming an upcoming interest payment, and potential State support for the issuer. The bonds of Vanke and peers were higher.
