EM ASIA CREDIT: GRWALL: New Issue USD BM3Y - FV
Apr-15 08:23
China Great Wall (GRWALL; -/-/BBB-)
New issue deal: USD bench 3Y
IPT @ T+195bp FV @ z+170bp (T+142bp area)
- We see FV @ z+170bp (ie T+142bp area), or +15bp pick up vs the seasoned ‘27s. We sketch FV considerations looking at seasoned USD bonds, excluding from the regression the PERP and the sub-bench 28s. We also look at how the curve has moved MtD, in light of the recent market turmoil we assess any changes in the shape of the curve.
- Great Wall Motor Co, Chinese car manufacturer focused on three main categories, SUV’s (80% of units sold), Pick up’s (14%) and Sedan’s (6%). Total sales volume in FY24 was 1.2mn units, broadly flat YoY. Sales to 5 largest customers accounted for 4.9%.
- Operating revenues increased +16% in FY 24 to RMB202.2bn and EBITDA doubled to RMB 9.7bn, manly due to price rises (16% price rise) and improved cost control. Net debt of RMB3,595mn, means non-adj leverage is modest at <1x. We view Great Motor Co’s credit risk as modest, given the robust balance sheet and operating performance.
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FED: March Economic Projections: Higher Inflation, Weaker Growth, Same Rates
Mar-14 21:28
The MNI Markets Team’s expectations for the updated Economic Projections in the March SEP are below.
- The unemployment rate is likely to rise slightly for 2025 alongside a downgrade in GDP growth, while the 2025 core and headline PCE inflation projections are set to rise again. Changes to later years will likely be limited, however.
- More detail on the shift in Fed funds rate medians is in our meeting preview - we will add more color next week.
FED: Market Pricing Nearly 3 2025 Cuts As Conditions Tighten
Mar-14 21:25
Amid rising government policy uncertainty, sentiment among businesses and consumers has fallen sharply since the start of the year, while equities and the dollar have reversed their post-election rise. Overall, financial conditions have tightened, even if stress is not yet mounting, e.g. no major widening of credit spreads (the accompanying chart shows the Fed’s financial conditions impulse index but only through January).
- Combined with growth fears, this has affected expectations for the Fed’s rate path, with around 18bp more cuts expected in 2025 compared with what was seen after the January FOMC. 65bp of cuts are priced for the year as a whole. 2025 cut pricing reached 71bp before the February inflation data and 76bp before the February payrolls report.
- A rate cut is seen with near zero probability for March’s meeting, but the first full cut is just about priced for June, with a second nearly priced by September.
- Chair Powell has no reason to endorse or refute these expectations – he’s likely to be happy with a press conference that ends with little discernable change in pricing.
CANADA'S CARNEY ANNOUNCES ELIMINATION OF THE CONSUMER CARBON TAX
Mar-14 21:17
- CANADA'S CARNEY ANNOUNCES ELIMINATION OF THE CONSUMER CARBON TAX
