EM ASIA CREDIT: Q1 Results: China Vanke (Caa2/B-/CCC+) liquidity remains key.
Apr-30 00:12
"*CHINA VANKE 1Q NET LOSS 6.25B YUAN VS. LOSS 362M YUAN Y/Y" - BBG
- China Vanke has reported Q1 results this morning, with an operating loss of CNY0.9bn versus a profit of CNY4.6bn in the year ago period. The main driver being a significant drop in profitability and margins within the development business, where revenues declined 51% YoY. Overall group gross profit margins declined to 6.1% versus 10.8% in Q1/2025. Liquidity concerns are driving valuations.
- In terms of liquidity, there was no new information, with the company reminding investors that it has strong support from major shareholder (33%), Shenzhen Metro Group, which has provided CNY7bn in secured loans. Vanke refinanced CNY9.9bn of public debt in Q1. We await any decision on broader financial aid from the Chinese state. China Vanke has around CNY17.8bn ($2.4bn) owed for the remainder of 2025.
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AUSSIE BONDS: Solid Absorption of May-28 Supply With More Demand Present
Mar-31 00:11
The latest round of ACGB May-28 supply sees the weighted average yield print 1.15bps through prevailing mids (per Yieldbroker), extending the recent trend of firm pricing at ACGB auctions.
- Moreover, the cover ratio jumped to a robust 4.4250x from 3.5400x at the previous outing.
- As highlighted in the preview, the outright yield was 15-20bps higher than the previous but around 55bps lower than the cycle peak in early November last year.
- Additionally, market expectations for RBA easing in 2025 have become more aggressive ahead of tomorrow’s RBA Policy Decision. While a 25bp rate cut in April is given only a 5% probability, a cumulative 70bps of easing is priced by year-end.
- Also on the positive side, it's important to note that the May-28 bond was included in the YM basket and that sentiment towards global bonds has improved recently.
- There has been no notable movement in the cash line in post-supply dealings.
AUSSIE BONDS: ACGB May-28 Auction Results
Mar-31 00:03
The Australian Office of Financial Management (AOFM) sells A$600mn of the 2.25% 21 May 2028, issue #TB149:
- Average Yield (%): 3.6498 (prev. 3.5038)
- High Yield (%): 3.6525 (prev. 3.5050)
- Bid/Cover: 4.4250x (prev. 3.5400x)
- The amount allotted at the highest accepted yield as a percentage of the amount bid at that yield (%): 72.4 (prev. 96.4)
- Bidders 37 (prev. 32), successful 11 (prev. 12), allocated in full 7 (prev. 7)
GOLD: New Highs in Place as Market Readies for Tariffs.
Mar-30 23:55
- Gold begins another week with new highs in place, though for the first time in a while, the pace may be coming out of this rally.
- A steadily falling call skew on gold ETF’s, with investors paying the smallest premium in over a year, shows that the bullish exuberance that the gold market has enjoyed could be running out of steam.
- Gold touched new highs last week and has opened up strongly touching a new high again in Asia trading this morning at US$3,088.80.
- As we approach the deadline for tariffs, the markets will remain cautious, providing a good back drop for gold demand in the early part of the week.
