EM ASIA CREDIT: MTR Corporation: Equity credit confirmed
(MTRC, Aa3/AA+/AA-)
"*S&PGRBulletin:MTRC Hybrid Secs Have Intermediate Equity Content " - BBG
S&P have confirmed the Intermediate equity content of the USD perps. issued in June, not a spread driver.
The issue arose because the final pricing spread (T+86bp on PerpNC5.5) was lower than the make-whole spread (T+100bp), potentially creating an incentive for the bond to be called early. This anomaly resulted from heavy demand (5x subscribed) driving the new issue spread down, without a corresponding adjustment to the make-whole spread. While the agency acknowledges this technical irregularity, it notes that MTR considers the perpetual bonds to be a strategic, long-term funding instrument but reserves the right to reassess the equity credit if circumstances change.
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FED: Miran To Join Fed Board, Cook Can't Be Removed - Per US Appeals Court
Ahead of this week's Fed meeting a few headlines of note have crossed this morning. Trump's Chair of the Council Of Economic Advisors, Stephen Miran, has been confirmed to the Fed board by the US Senate. This was widely expected and he will replace outgoing Governor Adriana Kugler. Via CNN: "Miran has said he will not resign from his influential post at the White House while he serves on the Fed’s board, instead taking unpaid leave."
- Elsewhere, via RTRS: "'U.S. APPEALS COURT DECLINES TO ALLOW TRUMP TO REMOVE FEDERAL RESERVE GOVERNOR LISA COOK". Rtrs added that this now paves the way for Cook to attend the upcoming Fed meeting (16-17 of Sep).
- Still the AP notes: "The Trump administration is expected to quickly turn to the Supreme Court in a last-ditch bid to unseat Cook before the Fed meets."
- Our policy team noted overnight: Federal Reserve Governor Lisa Cook is unlikely to win her case against President Donald Trump at the Supreme Court, whose 6-3 conservative majority has repeatedly sided with the president, George Washington University Law professor and administrative law expert Richard Pierce told MNI.
- Market pricing for this week's Fed outcome is fully priced for a 25bps cut, while by year end around 67bps of easing is priced (included the Sep outcome).
CHINA PRESS: China and U.S. Reach TikTok Consensus
China and the United States have reached a basic framework consensus on addressing TikTok-related issues through cooperative means, reducing investment barriers and advancing bilateral economic and trade cooperation, the Ministry of Commerce announced. He Lifeng, China’s lead representative for economic and trade affairs and vice premier at the State Council, emphasised that China will conduct technology export reviews in accordance with laws and regulations regarding TikTok. He expressed hope that the U.S. will lift restrictive measures against China at the earliest opportunity and take concrete actions to safeguard the hard-won outcome of the talks.
CHINA PRESS: China Manufacturing Growth Expected To Slow
China’s manufacturing investment growth will likely slow further in H2, as fluctuations in the external trade environment weighs on domestic manufacturing, while “anti-involution” policies curb investment in industries with excess capacity, according to Wang Qing, chief macro analyst at Dongfang Jincheng. Wang projects full-year manufacturing investment growth of around 5.5%, down 3.7 percentage points from 2023. Meanwhile, consumption growth could accelerate from August's 3.4% y/y rise, the lowest level since November 2024, supported by recently introduced childcare subsidies, exemptions from preschool education fee and interest subsidies on personal consumption loans, Wu Chaoming, chief economist at Caitong Securities, told Yicai.
