EM CREDIT SUPPLY: China Three Gorges: New USD issue FV
(YANTZE, A1neg/NR/A)
"*IPT: CHINA THREE GORGES 3Y US$ REG S SENIOR NOTES AT T+70 BPS A" - BBG
New Issue: $benchmark 3Y
IPT: T+70bp area (z+98bp)
FV: T+30bp area (z+58bp)
Three Gorges Finance I Cayman Islands Ltd (YANTZE), a wholly-owned subsidiary of China Three Gorges Corporation (CTG, A1 negative) is coming to the market with a new USD 3Y note. The notes will be unconditionally and irrevocably guaranteed by CTG. The company is fully state owned, mainly (90%) by the State-owned Assets Supervision and Administration Commission (SASAC).
China Three Gorges is the developer and operator of the Three Gorges Project on the Yangtze River, which is the world’s largest hydroelectric facility by total installed capacity (c. 154GW). The company plays a central role in China’s renewable energy ambitions.
In terms of relative value, we include the existing YANTZE 30s, as well as other China energy peers also owned by SASAC, such as China Petrochem (SINOPEC, A1/A+) and State Grid Corp of China (CHGRID, NR/A+/A). As we can see in the chart the SINOPEC curve is relatively flat, and the existing YANGZE is more or less on this curve.
We estimate the new 3Y will be flat to +5bp to the SINOPEC curve at z+58bp (T+30bp).
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CHINA PRESS: Listed Companies To Cut Deposits For Wealth Management Products
Listed companies will likely continue to move their deposits into wealth management products, with the scale reaching hundreds of billions of yuan in the next year, Yicai.com reported citing analysts. In the past year as of Sept 21, listed companies have announced a total CNY373.4 billion of entrusted wealth management, according to data by Choice Terminal. Currently, the one-year fixed deposit interest rate has dropped to 0.95%, while the average annualised yield of bank wealth management products has reached 2.12%, coupled with the general rise in major stock market indices, the newspaper said noting the significant yield gap. Investors are also increasingly adopting overseas wealth management through QDII and Southbound Connect, the newspaper added.
FOREX: Cross JPY - Move Higher Stalls, NZD/JPY Leads
US Equities, just another day and another all-time high, nothing stops this train. This morning US futures have opened a little lower on the H-1b visa story, E-minis -0.15%, NQU5 -0.10%. The JPY crosses could not follow through with their upward momentum as the move stalled to end the week with no clear direction from the BOJ.
- EUR/JPY - Friday night range 173.58 - 174.17, Asia is trading around 173.90. The pair has failed to extend its break back above 174.00 and should buyers not return imminently then the risks of a retracement increase. First support seen back towards the 173.00 area.
- GBP/JPY - Friday night 199.22 - 199.93, Asia trades around 199.60. This pair also could not extend its break higher and has failed again above 200.00. Buyers need to reassert the momentum higher again soon or the probability of a deeper pullback increases. First support seen back towards the 198.00 area.
- NZD/JPY - Friday night range 86.49 - 86.96, Asia is currently dealing 86.70. The pair remains the outlier thanks to the poor NZ GDP data last week, while below 88.00/88.50 I continue to have a bias lower. Anyone looking for a vehicle to express a long JPY in the crosses should be looking here, if cross JPY moves lower this pair should lead.
- CNH/JPY - Friday night range 20.7407 - 20.8275, Asia is currently trading around 20.8200. This pair has remained above its pivotal 20.30/20.40 support. The pair continues to trade comfortably within its recent 20.40-21.00 range.
Fig 1 : NZD/JPY Daily Chart
Source: MNI - Market News/Bloomberg Finance L.P
CHINA PRESS: Stabilising Prices Require More Efforts To Boost Demand
Weak demand is blunting the impact of measures to curb excessive competition, which have only lifted producer prices moderately, Guan Tao, global chief economist at BOCI China, wrote in an article published on Yicai.com. Guan urged authorities to step up efforts to support demand through job creation, investment expansion and timely policy adjustments. He suggested the government consider hiring college graduates who have been unemployed for several years to collect labour and consumption statistics, noting the youth jobless rate for those aged 16-24 rose 0.1 percentage point year-on-year to 18.9% in August, the highest since records began.
