EM ASIA CREDIT: China's Xiaomi Rating Upgrade

SFIZ5 96.30/96.15/96.05 broken put fly paper paid 6 on 8K

Mixed SOFR/Treasury option flow overnight with few standouts on modest overall volumes ahead morning data: SOFR put trees and Dec'25 2Y iron condor vs. straddles. Underlying futures firmer - off early overnight highs, curves mildly steeper (2s10s +.426 at 51.155; 5s30s +.691 at 97.400). Projected rate cut pricing gains slightly vs. late Tuesday levels (*): Dec'25 at -17.8bp (-17.2bp), Jan'26 at -26.9bp (-26.4bp), Mar'26 at -35.4bp (-34.9bp), Apr'26 at -41.5bp (-41.4bp).

• SOFR Options:
  • +4,500 SFRZ5 96.37/96.50/96.62/96.68 broken call condors, 1.0
  • 1,600 SFRZ5 96.31/96.43 call spds vs. SFRG5 96.37/96.50 call spds, 2.5 net
  • -12,000 SFRX5 96.18/96.25/96.31 put trees, 3.25 ref 96.255
  • +2,200 0QX5 96.37 calls, 5.0
  • +3,000 SFRH6 96.50/96.62 call spds vs. 96.12/96.25 put spds, 0.5 net
  • Block, 3,000 0QZ5 97.37 calls, 2.0 vs. 96.935/0.10%
  • 2,000 SFRZ5 96.18/96.25/96.37 broken call trees ref 96.26
  • 2,300 SFRZ5 96.31/96.37 call spds ref 96.26
  • 2,400 SFRZ5 96.18/96.25 put spds ref 96.265
  • 7,500 SFRX5 96.25 straddles, 6.0
• Treasury Options:
  • +18,000 TUZ5 104/104.125/104.5/104.75 iron condor vs 4,500 104.25 straddles, 2 net/condor over
  • over 11,900 TYZ5 113 calls, 25 ref 112-28 to -26
  • +/-8,000 FVZ5 109.25 calls, 19-20 vs. 109-08.25/0.53%
  • over 11,900 TYZ5 113 calls, 25 ref 112-28 to -26
  • +5,000 TYZ5 113 calls, 19 vs. 112-21.5/0.42%
  • 3,800 TUZ 103.87 puts ref 104-06.38 to -08.25
  • +5,000 TUF6 103.75/104/104.12/104.25 put condors, 0.5 ref 104-11.88
  • +5,000 TYZ5 112 puts, 7
  • +5,000 TYZ5 111.5/112.25 put spds, 8 ref 112-30

Euractiv reports that according to people familiar with the matter, "The European Commission is considering plugging Ukraine’s colossal funding gap with cash raised from common EU debt and bilateral member state grants". The proposals may come as part of an 'options paper' regarding support for Ukraine to be circulated in EU capitals in the coming weeks. Euractiv: "The joint borrowing possibility set out in the Commission’s paper will not seek to back the loan using the EU’s own long-term budget as there is insufficient headroom to do so..."

• The article notes that the preferred option for assisting Ukraine's funding needs remains the creation of 'reparations loans' utilising frozen Russian assets held in the EU.
• As MNI noted earlier (see 'BELGIUM: Drones Shut Down Airports As Frozen Russian Asset Meeting w/EU Looms) the Belgian gov't remains a major obstacle to the use of ~EUR140bln held at Euroclear. The 'options paper' itself came as part of a watered-down agreement at the last European Council summit to keep Belgium on board with the summit's conclusions.
• On 4 Nov, European Economy Commissioner Valdis Dombrovskis said that if the frozen Russian assets plan does not go forward, "It may open questions on some possible bridging solutions”.
• Reuters reports that Germany is set to commit an additional EUR3bln in aid for Kyiv next year, raising the 2026 total to EUR11.5bln. However, this will still fall far short of Kyiv's financing requirements, with Dombrovskis noting the grants solution as “more complicated” for member states.