Connecting Markets East & West
2H 2025 Asia Credit Outlook – Playing Defence in an Uncertain World
Nicholas Yap, Head of Credit Desk Analysts
Eric Liu, Credit Desk Analyst
Iris Chen, Credit Desk Analyst
Aishwarya Pai, Credit Desk Analyst
May 26, 2025
STRICTLY PRIVATE AND CONFIDENTIAL
For Professional Investors
© Nomura
Table of Contents
• Credit Strategy – Playing Defence in an Uncertain World
• Summary of Top Trade Ideas
• Trading Strategy – Asian Sovereigns & Quasis
• Trading Strategy – Asian Financial Institutions
• Trading Strategy – Asian IG Corporates
Slide 2
Slide 8
Slide 12
Slide 14
•
China IG Corporates
Slide 21
•
Hong Kong IG Corporates
Slide 26
•
Korea IG Corporates
Slide 30
•
India IG Corporates
Slide 32
•
Australia IG Corporates
Slide 34
•
Other Asian IG Corporates
Slide 35
• Trading Strategy – Asian HY Corporates
•
China Property
Slide 37
•
China HY Industrials
Slide 44
•
Hong Kong & Singapore NR/HY Corporates
Slide 46
•
Macau Gaming
Slide 47
•
India HY Corporates
Slide 49
•
Indonesia HY Corporates
Slide 53
•
Other Asian HY Corporates
Slide 55
• Appendix – Data and Chart Pack
Slide 59
1
Credit Strategy: Playing Defence in an Uncertain World
Credit spreads widened sharply post “Liberation Day” but have completely retraced that move (and more). IG spreads are still 33bp off their
YTD tights while HY spreads are now close to their YTD tights. Total returns YTD have been relatively muted with HY outperforming IG.
•
JACI IG spreads, which started the year at 132bp, initially compressed to YTD tights of 117bp (-16bp) in mid-February before widening to YTD wides of 192bp
(+51bp post “Liberation Day and +60bp YTD). They have since compressed 42bp from the wides to 150bp and are 9bp wider than pre “Liberation Day” levels and
still 33bp off the YTD tights. JACI HY spreads, which started the year at 625bp, widened to YTD wides of 812bp (+167bp post “Liberation Day” and +188bp YTD).
They have since compressed a whopping 246bp from the wides and are 79bp tighter than pre “Liberation Day” levels at 566bp, close to their YTD tights. The HYto-IG premium, which started the year at 492bp, widened to 620bp (+128bp) but has since compressed to 416bp (-203bp post “Liberation Day and -76bp YTD).
Overall JACI recorded relatively muted total returns of +1.9% YTD (+0.5% spread return, +1.4% UST return). HY recorded returns of +2.8% YTD (+1.2% spread
return, +1.6% UST return), outperforming IG which recorded returns of +1.8% YTD (+0.3% spread return, +1.5% UST return) on decent spread compression.
Exhibit 1. Asia Credit – JACI Spread
Exhibit 2. Asia Credit – HY versus IG Spread
JACI Z-Spread to Worst
330
320
310
300
290
280
270
260
250
240
230
220
210
200
190
180
170
HY - IG
196
Source: Bloomberg, Nomura
1300
1200
1100
1000
900
800
700
600
500
400
300
200
100
0
JACI IG
JACI HY
566
150
Jan-23
Feb-23
Mar-23
Apr-23
May-23
Jun-23
Jul-23
Aug-23
Sep-23
Oct-23
Nov-23
Dec-23
Jan-24
Feb-24
Mar-24
Apr-24
May-24
Jun-24
Jul-24
Aug-24
Sep-24
Oct-24
Nov-24
Dec-24
Jan-25
Feb-25
Mar-25
Apr-25
May-25
•
Overall JACI spreads, which started the year at 188bp, compressed to YTD tights of 173bp (-15bp) in mid-February amid the still decent market tone, although
US President Trump’s 2nd April “Liberation Day” tariff announcements sent spreads much wider to YTD wides of 264bp (+66bp post “Liberation Day” and +76bp
YTD). However, spreads quickly retraced the widening (and more), with the tightening trend continuing post the US-China tariff de-escalation in early May. From
the wides, JACI spreads have retraced 68bp to 196bp at present and are now 2bp tighter than pre “Liberation Day” levels, albeit still 23bp off the YTD tights.
Jan-23
Feb-23
Mar-23
Apr-23
May-23
Jun-23
Jul-23
Aug-23
Sep-23
Oct-23
Nov-23
Dec-23
Jan-24
Feb-24
Mar-24
Apr-24
May-24
Jun-24
Jul-24
Aug-24
Sep-24
Oct-24
Nov-24
Dec-24
Jan-25
Feb-25
Mar-25
Apr-25
May-25
•
Source: Bloomberg, Nomura
2
Credit Strategy: Playing Defence in an Uncertain World
Worse-case tail risk scenarios have eased but macro uncertainty remains elevated:
•
•
US-China trade war saw a significant de-escalation, but US effective tariff rate is still very high by historical standards: The US and China on 12th May
issued a joint statement to significantly slash tariffs imposed on one another by a larger-than-expected 115pp, i.e. US tariffs on China reduced to 30% from 145%
for 90 days and China’s tariffs on the US reduced to ~10% from ~125%. China also committed to suspend or remove non-tariff countermeasures against the US
in place since “Liberation Day”. While worse-case tail risk scenarios, like a sudden stop in trade with potential non-linear effects on both economies, have eased,
the US effective tariff rate (which our economists estimate at 16.5%) is still very high by historical standards, while the damage is already done, including payback
from a rush of economic activity in 1Q to beat the tariffs and frozen investments due to extreme business uncertainty. In the US, our economists have modestly
raised their growth forecast (4Q/4Q GDP growth to 0.8% from 0.6%) and lowered their inflation forecast (year-end core PCE to 3.3% from 4.7%). With still-high
inflation and reduced recession risk, they expect the Fed to only cut rates in December, with two subsequent cuts in 1Q26, reaching a terminal rate of 3.625%.
China took the first step towards cushioning the tariff blow, but a lot more needs to be done: China faces a double whammy from the ongoing property
crisis internally and the US-China trade war externally (although materially de-escalated). 1Q25 GDP at 5.4% was better-than-expected, but our economists still
expect growth headwinds going forward and project GDP growth to slow to 4.5% in 2025 from 5.0% in 2024. Beijing on 7th May announced a package of stimulus
measures, including a 50bp RRR cut, a 10bp policy rate cut, a 25bp cut to mortgage rates under the housing provident fund, a 25bp rate cut to structural lending
facilities, and RMB1.1trn in new re-lending quota. However, these policies alone will not be sufficient for China to meet its “around 5.0%” growth target. Looking
ahead, our economists expect another 50bp RRR cut and a 15bp policy rate cut in 4Q, and increased fiscal spending to boost consumption. They believe bolder
moves need to be taken to clean up the property sector mess, support sustainable consumption by reforming the pension system and revamp the fiscal system.
Our trading strategy for 2H 2025:
•
Asia Credit back to being a carry play, although we turn more defensive compared to the start of the year and prefer IG over HY for 2H 2025. Spreads
have retraced all or more of their “Liberation Day” widening and are once again closing in on historical tights. While overall spreads are still 23bp off their YTD
tights (with IG spreads still 33bp off their tights and HY spreads at their tights), the macro backdrop has undoubtedly worsened since then, with the damage from
the initial tariff announcements already done, notwithstanding the latest US-China de-escalation. Spreads are therefore unlikely to compress materially from here.
Nevertheless, all-in yields still look decent (overall JACI yield at 5.8% and JACI IG yield at 5.4% remain at the higher end of the historical range), which brings us
back to the thesis of Asia Credit remaining a decent carry play. For IG, while we do not see much scope for tightening, we also do not expect much widening due
to their decent all-in yield, the fact that a large proportion of the space remains well anchored by domestic investors (like China IG), and supportive technicals with
net bond supply still likely to be slightly negative this year. On the other hand, with HY spreads at their tights and with macro uncertainty likely to remain elevated,
which tends to hurt HY names relatively more than IG names, we anticipate some spread widening from here. Overall, we shift to a preference for positioning
in IG over HY for 2H 2025, compared to our indifferent/agnostic stance between the two at the beginning of the year. Within HY, we are Overweight on
China Property and Small Overweight on Macau Gaming but have turned Neutral on India HY. For 2H 2025, we expect IG spreads to remain rangebound (±15bp) but expect HY spreads to widen ~50bp. Taken together, we expect overall JACI spreads to end the year about flat to ~20bp wider.
3
JACI IG Z-Spread to Worst
240
220
169
180
160
140
120
100
150
1600
1500
1400
1300
1200
1100
1000
900
800
700
600
500
400
300
200
JACI HY Z-Spread to Worst
612
566
Source: Bloomberg, Nomura
Jan-11
Jul-11
Jan-12
Jul-12
Jan-13
Jul-13
Jan-14
Jul-14
Jan-15
Jul-15
Jan-16
Jul-16
Jan-17
Jul-17
Jan-18
Jul-18
Jan-19
Jul-19
Jan-20
Jul-20
Jan-21
Jul-21
Jan-22
Jul-22
Jan-23
Jul-23
Jan-24
Jul-24
Jan-25
Jan-11
Jul-11
Jan-12
Jul-12
Jan-13
Jul-13
Jan-14
Jul-14
Jan-15
Jul-15
Jan-16
Jul-16
Jan-17
Jul-17
Jan-18
Jul-18
Jan-19
Jul-19
Jan-20
Jul-20
Jan-21
Jul-21
Jan-22
Jul-22
Jan-23
Jul-23
Jan-24
Jul-24
Jan-25
Exhibit 1. Asia Credit – JACI IG Spread
Jan-11
Jul-11
Jan-12
Jul-12
Jan-13
Jul-13
Jan-14
Jul-14
Jan-15
Jul-15
Jan-16
Jul-16
Jan-17
Jul-17
Jan-18
Jul-18
Jan-19
Jul-19
Jan-20
Jul-20
Jan-21
Jul-21
Jan-22
Jul-22
Jan-23
Jul-23
Jan-24
Jul-24
Jan-25
Jan-11
Jul-11
Jan-12
Jul-12
Jan-13
Jul-13
Jan-14
Jul-14
Jan-15
Jul-15
Jan-16
Jul-16
Jan-17
Jul-17
Jan-18
Jul-18
Jan-19
Jul-19
Jan-20
Jul-20
Jan-21
Jul-21
Jan-22
Jul-22
Jan-23
Jul-23
Jan-24
Jul-24
Jan-25
Credit Strategy: Playing Defence in an Uncertain World
Exhibit 2. Asia Credit – JACI IG Yield
300
Average (since 2011)
6.5
JACI IG Yield to Worst
280
6.0
260
5.5
5.4
5.0
200
4.5
4.0
3.5
3.0
2.5
2.0
Source: Bloomberg, Nomura
Source: Bloomberg, Nomura
Exhibit 1. Asia Credit – JACI HY Spread
Exhibit 2. Asia Credit – JACI HY Yield
Average (since 2011)
21
20
19
18
17
16
15
14
13
12
11
10
9
8
7
6
5
4
JACI HY Yield to Worst
9.5
Source: Bloomberg, Nomura
4
Credit Strategy: Playing Defence in an Uncertain World
Supply: Asia ex-AU/JP gross issuance of USD86.5bn YTD is at a faster run rate vs 2023-24, but slightly slower than 2022.
•
•
YTD new issuance has come largely from the IG space (USD69.9bn, 81%) with USD16.6bn (19%) of HY/unrated issuance (with most of unrated issuance being
Chinese LGFVs). By industry, just over half of YTD new issuance has come from corporates (USD45.6bn, 53%), followed by financials (USD36.1bn, 42%) and
sovereigns (USD4.8bn, 5%). By country, new issuance has mainly come from China (USD30.4bn, 35%, +92% vs 2024 YTD!) and Korea (USD21.4bn, 24% -6%
vs 2024 YTD). Elsewhere, HK USD9.1bn (10%), SG USD5.8bn (7%), MY USD5.3bn (6%), ID USD4.6bn (5%), IN USD4.5bn (5%) and PH USD3.7bn (4%).
YTD new issuance is running on track with our full-year gross issuance forecast of ~USD180bn, and we maintain that forecast. With redemptions
(excl. coupons) of ~USD185bn, net issuance will likely remain slightly negative at ~-USD5bn in 2025, but less negative than ~-USD45-50bn in 2024.
Demand: EM HC bond funds continue to see outflows, but not as large as last year. Meanwhile, Asian bond funds have been relatively resilient.
Many de-risked ahead of “Liberation Day” in anticipation of outflows, and while there have been some outflows since, they were not as heavy as
anticipated. Chinese investors (especially banks) are still seeing stable inflows and continue to deploy them into Chinese offshore USD bonds.
As per EPFR data, EM bond funds recorded USD175m of inflows YTD (vs USD15.4bn outflows in 2H24, USD8.9bn outflows in 1H24 and USD29.3bn outflows in
2H23). Hard currency funds had USD8.0bn of outflows YTD (vs USD14.4bn outflows in 2H24, USD2.9bn outflows in 1H24 and USD17.5bn outflows in 2H23). On
the other hand, local currency funds had USD9.0bn of inflows YTD (vs USD80m inflows in 2H24, USD2.1bn outflows in 1H24 and USD11.2bn outflows in 2H23).
Finally, blended funds had USD854m of outflows YTD (vs USD1.0bn outflows in 2H24, USD3.9bn inflows in 1H24 and USD561m outflows in 2H23).
Exhibit 1. Asia Credit – Supply by Segment
315
300
IG
HY
Crossover
Exhibit 2. EM Bond Fund Flows (USD bn)
20
NR
34
1
250
All EM Bond Fund Flows
EM Hard and Blend ccy Bond flows
10
67
Last 4 week sum (US$ bn)
350
YTD 22 May US$ supply (US$bn)
•
0
(10)
200
150
100
50
9
150
1
37
163
180
12
144
213
103
88
10
5 1
16 20
117
73
112
47 0
May-25
Source: EPFR, Nomura
Nov-24
2025YTD
May-24
2024
Nov-23
2024YTD
May-23
Source: Bond Radar, Nomura
2022
Nov-22
2022YTD
May-22
2021
Nov-21
2021YTD
(50)
May-21
2023
-
(40)
Nov-20
2023YTD
132
May-20
58
550
48
Nov-19
101
(30)
86
10
6
70
May-19
53
- 22
49
(20)
5
Credit Strategy: Playing Defence in an Uncertain World
Exhibit 1. Asia Credit – USD Annual Supply
USD Issuance
323 315
300
250
230
200
181
172
148
150
52
59
2011
33
112
86
66
2010
33
2007
37
163
144
117 121
100
50
289
288
2006
YTD 22 May US$ supply (US$bn)
350
13
-
YTD'2025
2024
2023
2022
2021
2020
2019
2018
2017
2016
2015
2014
2013
2012
2009
2008
2005
Source: Bond Radar, Nomura
Exhibit 1. Asia Credit – G3 Annual Supply
G3 Issuance
350
320
311
344 345
300
250
250
161
150
55
59
2011
39
126
92
69
2010
38
2007
43
177
156
119 129
100
50
191
189
200
2006
YTD 22 May US$ supply (US$bn)
400
15
YTD'2025
2024
2023
2022
2021
2020
2019
2018
2017
2016
2015
2014
2013
2012
2009
2008
2005
Source: Bond Radar, Nomura
6
Credit Strategy: Playing Defence in an Uncertain World
Individual sector recommendations
Sector
Recommendations
Sovereigns
• Small Overweight: Sri Lanka (MLBs)
• Neutral: Philippines, Malaysian sovereign (MALAYS) and quasis (KNBZMK), Pakistan
• Underweight: Indonesian sovereign (INDON/INDOIS), Indonesian quasis FRIDPT/IDASAL, Mongolia (MONGOL) and
sovereign guaranteed City of Ulaanbaatar (CITULA)
Financial
Institutions
• Chinese Banks/NBFIs: Banks – Neutral AT1s/T2s/seniors; Leasing – Overweight FRESHK seniors, Neutral seniors of
bank-affiliated leasing companies; AMCs – Overweight HRINTH seniors/sub perps, Small Overweight GRWALL seniors,
Neutral CCAMCL/ORIEAS AT1s/seniors; Insurance – Neutral PINGIN seniors; Securities – Neutral seniors
• Hong Kong/Macau Banks/Insurance: Banks – Small Overweight BNKEA c2025 AT1s, Neutral other AT1s/T2s/LAC
seniors; Insurance – Neutral subs/seniors
• Taiwan Insurance: Neutral NSINTW T2s, Underweight CATLIF T2s
• Korean Banks/NBFIs: Banks – Neutral AT1s/T2s, Underweight policy bank and commercial bank seniors; Insurance –
Small Overweight TYANLI T2s, Neutral other T1s/T2s; Securities – Neutral seniors; Credit Card – Neutral seniors
• Indian Banks/NBFCs: Banks – Overweight AT1s, Neutral seniors of public sector banks and private sector banks; NBFCs –
Small Overweight MGFLIN seniors, Neutral INRCIN/POWFIN/RECLIN/SHFLIN/MUTHIN/PICAHF/IIFOIN/IHFLIN seniors
• Singaporean Banks/Insurance: Overweight GESP AT1s, Neutral other AT1s/T2s
• Other ASEAN Banks: Thailand – Small Overweight KTBTB AT1s and KBANK T2s, Underweight BBLTB 2036c2031 and
2040c2035 T2s, Neutral other AT1s/T2s/seniors and MTCTB seniors; Indonesia – Small Overweight BBNIIJ AT1s, Neutral
BBNIIJ T2s and BBKPIJ seniors; Philippines – Underweight SECBPM/RCBPM/PNBPM seniors, Neutral other AT1s/seniors
• Australian Banks/NBFIs: Banks – Neutral AT1s/T2s; Insurance – Neutral QBEAU T2s
• Japanese Banks/NBFIs: Banks – Overweight SUMIBK AT1s, Neutral other AT1s/T2s/TLAC seniors; Insurance –
Overweight NIPLIF/DAIL/MYLIFE subs, Small Overweight ASAMLI subs, Neutral SUMILF subs
IG Corporates
• Overweight: China Local SOEs/LGFVs (short end bonds)
• Neutral: China Central SOEs, China POEs, India, Australia
• Underweight: Hong Kong, Korea
HY Corporates
• Overweight: China Property
• Small Overweight: Macau Gaming
• Neutral: China HY Industrials, India HY
7
Summary of Top Trade Ideas
Asian Sovereigns/Quasis and Financial Institutions
Sector
Recommendations
•
•
Asian Sovereigns
and Quasis
•
•
•
•
•
•
•
•
Asian Financial
Institutions
•
•
•
•
•
•
•
•
•
•
•
Small Overweight Sri Lanka’s macro-linked bonds (MLBs) – SRILAN 2033 MLBs (PX: 75.38, Yield to average life: 8.43%), SRILAN 2036
MLBs (PX: 75.00, Yield to average life: 8.62%) and SRILAN 2038 MLBs (PX: 75.00, Yield to average life: 8.87%)
Underweight long end Indonesian sovereign bonds – INDON 2/2054 (PX: 88.63, Z+174bp, YTM: 5.93%), INDON 9/2054 (PX: 89.50,
Z+172bp, YTM: 5.91%), INDOIS 7/2054 (PX: 93.50, Z+179bp, YTM: 5.97%) and INDOIS 11/2054 (PX: 94.25, Z+189bp, YTM: 6.07%)
Underweight long end bonds of Indonesian quasis FRIDPT and IDASAL – FRIDPT 2052 (PX: 93.94, Z+249bp, YTM: 6.69%) and IDASAL
2050 (PX: 89.81, Z+243bp, YTM: 6.64%); Switch from FRIDPT 2052 / IDASAL 2050 into PLNIJ 2050 (PX: 66.44, Z+259bp, YTM: 6.81%)
Underweight Mongolian sovereign bonds – MONGOL 2030 (PX: 96.75, Z+371bp, YTM: 7.45%) – and government guaranteed CITULA
2027 (PX: 99.50, Z+421bp, YTM: 7.97%)
Overweight Indian banks’ AT1s – HDFCB c2026 AT1s (PX: 96.13, YTC: 6.97%, YTR: 6.06%) and AXSBIN c2026 AT1s (PX: 96.43, YTC:
7.03%, YTR: 6.24%)
Overweight GESP c2032 AT1s (PX: 97.25, YTC: 5.90%, YTP: 5.15%)
Overweight SUMIBK c2034 AT1s (PX: 98.88, YTC: 6.77%, YTP: 6.58%) and SUMIBK c2035 AT1s (PX: 96.88, YTC: 6.89%, YTP: 6.44%)
Overweight NIPLIF 2055c2035 subs (PX: 101.13, YTC: 6.34%, YTM: 6.76%), DAIL c2035 subs (PX: 99.38, YTC: 6.29%, YTP: 6.47%)
and MYLIFE c2035 subs (PX: 98.13, YTC: 6.36%, YTP: 6.65%)
Overweight FRESHK 3/2028 (PX: 98.81, Z+260bp, YTM: 6.34%) and FRESHK 10/2028 (PX: 98.88, Z+264bp, YTM: 6.38%)
Overweight CFAMCI seniors – CFAMCI 5/2029 (PX: 96.13, Z+186bp, YTM: 5.59%), CFAMCI 11/2029 (PX: 93.25, Z+185bp, YTM:
5.61%) and CFAMCI 2/2030 (PX: 90.75, Z+186bp, YTM: 5.62%) – and sub perps – CFAMCI c2025 (PX: 99.25, Z+205bp, YTC: 6.45%)
Small Overweight BNKEA c10/2025 AT1s (PX: 99.25, YTC: 7.71%, YTP: 9.61%)
Small Overweight KTBTB c2026 AT1s (PX: 98.18, YTC: 6.69%, YTP: 7.62%)
Small Overweight BBNIIJ c2027 AT1s (PX: 94.88, YTC: 7.35%, YTP: 7.58%)
Small Overweight ASAMLI c2031 subs (PX: 89.38, YTC: 6.36%, YTP: 7.56%)
Small Overweight TYANLI 2035c2030 T2s (PX: 100.45, YTC: 6.14%, YTM: 7.88%)
Small Overweight KBANK 2031c2026 T2s (PX: 96.54, YTC: 6.05%, YTM: 5.90%)
Small Overweight GRWALL 2030 (PX: 85.75, Z+177bp, YTM: 5.55%)
Small Overweight MGFLIN 9/2027 (WAL, PX: 99.25, Yield to average life: 7.74%)
Underweight CATLIF 2034 T2s (PX: 100.91, Z+185bp, YTM: 5.82%) and CATLIF 2039c2034 T2s (PX: 95.52, YTC: 5.93%, YTM: 5.86%)
Underweight BBLTB 2036c2031 T2s (PX: 86.48, YTC: 6.07%, YTM: 6.16%) and BBLTB 2040c2035 T2s (PX: 96.95, YTC: 6.48%, YTM:
6.34%)
Underweight smaller Filipino banks’ seniors – SECBPM 2029 (PX: 101.52, Z+134bp, YTM: 5.07%), PNBPM 2029 (PX: 98.43, Z+150bp,
YTM: 5.25%) and RCBPM 2029 (PX: 100.27, Z+154bp, YTM: 5.31%)
8
Summary of Top Trade Ideas
Asian IG Corporates
Sector
China IG
Corporates
Recommendations
•
•
•
•
•
•
Overweight CPDEV 2026-2028 at 6.0-7.0% as a decent carry play
Overweight CONAMP 2030 at Z+108bp
Overweight TME 2030 at Z+107bp
Overweight ZHOSHK 2026-2028 at Z+182-308bp
Small Overweight MEITUA 2028-2030 at Z+105-124bp
Small Overweight AACTEC 2026-2031 at Z+112-177bp
Hong Kong IG
Corporates
• Small Overweight CASHLD 4.0% perp at 97 cash price, 6.3% YTC / 8.3% YTP
Korea IG
Corporates
• Switch from LGCHM 3.625% 2029 at Z+158bp to LGENSO 5.375% 2029 at Z+172bp, and from LGCHM 2.375% 2031 at
Z+163bp to LGENSO 5.875% 2035 at Z+231bp
India IG
Corporates
• Switch from TATAIN 5.45% 2028 at Z+151bp/5.2% to JLR-issued TTMTIN 5.875% 2028 at Z+224bp/6.0% and TTMTIN
5.5% 2029 at Z+226bp mid/6.0%
Australia IG
Corporates
•
•
•
•
•
Other Asian IG
Corporates
• Overweight LLPLCA 6.875% 2039 at 7.2%/98.4c
• Switch from PTTEPT 2042/2059 at Z+210-218bp/6.3% to PETMK 2055 at Z+196bp/6.1%
Overweight PONEIV 2031 at Z+281bp/6.7%
Overweight AUD PNHAU 7.75% 2054c29 at ASW+448bp/YTC of 8.1%/98.5c
Overweight CIMAU 7% 2034 at Z+265bp/6.1%
Small Overweight NCIAU 2027 at Z+165bp/5.4% and NCIAU 2031 at Z+221bp/6.0%
Small Overweight NBNAUS 2031-2032 at Z+113-145bp/5.0-5.4%
9
Summary of Top Trade Ideas
Asian HY Corporates
Sector
Recommendations
China Property
•
•
•
•
•
•
•
China HY
Industrials
• Overweight FOSUNI 2025-2028 at 7.1-8.4% as a good carry play
• Small Overweight BTSDF 2028 at 101.8 cash price, or 8.5% yield
Hong Kong &
Singapore NR/HY
Corporates
• Overweight GLPCHI 2026 at 94 cash price (10.5% yield) as a good carry play, Neutral on GLPSP 2028 at 10.5% and
GLPSP perps at 58-59 cash price (13.4-13.7% YTP)
Macau Gaming
•
•
•
•
Overweight solid IG SOE developers including CHIOLI 2028-2034 at Z+146-179bp and CRHZCH 2029 at Z+152bp
Overweight CHJMAO 2026-2029 at 6.5-7.3% and CHJMAO 6.0% perp at 99.5 cash price (6.7% YTC, 10.3% YTP)
Overweight YUEXIU 2026-2031 at 5.6-6.5% (Z+130-272bp) as a good carry play, also view as a good buy-on-dip candidate
Overweight GRNCH 2028 at 7.7%
Overweight SHUION 2026 / YLLGSP 2026 at 9.1%/8.0%
Small Overweight VNKRLE 2027-2029 at 73-83 cash price (11.2-12.2%)
Small Overweight LNGFOR 2027-2032 at 9.1-9.3%
Overweight SANLTD 2028-2031 at 5.8-6.0%/Z+205-216bp including SANLTD 2031 at 6.0%/Z+216bp
Overweight MPEL 2028-2032 at 7.2-7.7% including MPEL 2032 at 7.7%
Overweight STCITY 2029 at 8.3%
Small Overweight WYNMAC 2027-2029 at 6.4-6.9% including WYNMAC 2029 at 6.9%
10
Summary of Top Trade Ideas
Asian HY Corporates (Cont.)
Sector
Recommendations
•
•
•
•
•
India HY
Corporates
Indonesia HY
Corporates
Australia, Japan
and Other HY
Corporates
•
•
•
•
•
Overweight AZUPOE 3.575% 2026 RG3 at 7.9%/95.3c
Overweight ACMSOL 4.7% 2026 RG at 6.8%/97.7c
Overweight RPVIN 4.5% 2028 RG4 at 6.8%/93.5c
Overweight GRNKEN 3.85% 2026 RG1 at 7.1%/97.4c
Overweight ADANEM 2030 at Z+347bp/7.2% and 2031 at Z+362bp/7.4%, ADSEZ 2027-2031 at 7.0-7.7% including ADSEZ 2031 at
7.0%/81.7c and ADGREG 2042 at 8.5%/87.5c
Overweight VEDLN bonds with a preference on VEDLN 10.875% 2029 at 11.2%/98.7c > VEDLN 9.85% 2033 at 11.0%/93.7c / VEDLN
9.475% 2030 at 10.9%/94.2c > VEDLN 10.25% 2028 at 10.4%/99.5c > VEDLN 11.25% 2031 at 11.2%/100.2c
Small Overweight COGREN 9.5% 2027 holdco at 7.4%/102.4c
Small Overweight CGRNEG 7.5% 2033 RG2 at 7.1%/101.75c
Small Overweight RNW 7.95% 2026 offshore holdco at 7.5%/100.3c
Small Overweight HEXWIN 5.375% 2026 at 6.5%/98.4c
Small Overweight JSWINI 2029 at Z+237bp/6.1%
•
•
•
Small Overweight PTSMGP 7.75% 2031 at 8.0%/99c
Small Overweight BUMAIJ 7.75% 2026 at 8.3%/99.6c
Underweight PWONIJ 4.875% 2028 at 6.2%/96.4c
•
•
•
•
Overweight MINAU 2027-2030 at MINAU 8.5% 2030 at 9.1%/97.7c
Overweight KARAU 10.5% 2029 at 10.7%/99.5c
Overweight MONMIN 8.44% 2030 at 10.5%/92.2c
Overweight RAKUTN 2027-2029 at 6.7-7.7%, RAKUTN 5.125% PNC26 (PX: 96.8, YTC: 8.3%, YTP: 9.3% mid), RAKUTN 8.125%
PNC29 (PX:95.8, YTC: 9.1%, YTP: 9.3% mid) and RAKUTN 6.25% PNC31 (PX:89.3, YTC: 8.4%, YTP: 9.4% mid)
Small Overweight SMCGL perps including SMCGL 7% PNC25 at YTC 8.2%/99.5c
Small Overweight ICTPM 5% PNC26 at YTC of 6.3%/99.1c
Small Overweight MONDFI 5.125% 2029
Underweight SOFTBK curve with SOFTBK 2027-2031 at 6.1-6.6% (Z+229-274bp) and SOFTBK 6.875% PNC27 (PX:97, YTC: 8.4%,
YTP: 9.0% mid)
•
•
•
•
•
11
Trading Strategy: Asian Sovereigns & Quasis
IG Sovereigns & Quasis
Country
Views and Recommendations
•
•
Indonesia
[Baa2 (Stb) / BBB
(Stb) / BBB (Stb)]
•
•
Philippines
[Baa2 (Stb) / BBB+
(Pos) / BBB (Stb)]
•
Malaysia
[A3 (Stb) / A- (Stb) /
BBB+ (Stb)]
•
Growth expected to slow while fiscal risks remain high. 1Q25 GDP growth slowed to 4.9% from 5.0% in 4Q24 as domestic demand
slowed sharply to 3.5% (its lowest point since 4Q22) from 4.9%. Our economists forecast full-year growth to slow to 4.7% from 5.0% in
2024 (and vs consensus of 5.0%), reflecting a broad-based softening in domestic demand and the impact of rising global trade tensions
on goods exports. On the fiscal front, our economists maintain their forecast for the 2025 fiscal deficit to be revised higher to 2.9% of GDP
from the budget’s 2.5%, close to the ceiling of 3.0%, with risks skewed to further widening. In their view, President Prabowo will view the
weaker 1Q25 growth due to slow budget disbursements as unacceptable and will likely push spending on his populist priority programs.
Consolidation of quasis under the newly established SWF Danantara raises question marks on corporate governance. The main
concerns include Danantara’s lack of transparency and accountability, potential conflicts of interest, and if it can be used as a vehicle for
political manipulation or corruption, albeit these are partly mitigated by the formation of an advisory board featuring prominent individuals.
Bond views:
• Underweight the INDON/INDOIS complex with INDON/INDOIS 2054 at ~5.9-6.1% / ~Z+170-190bp, which are still rich on spread.
Using INDON/INDOIS 2050 as proxies, z-spreads at ~Z+170-180bp are not far off their tightest levels since 2021 of ~Z+150bp.
• Underweight long end bonds from quasis FRIDPT / IDASAL as we expect some decompression of their currently tight quasi-tosovereign bases amid rising macro concerns. FRIDPT 2052 at ~6.7% trade ~70bp outside INDON 2052 vs ~135bp at end-2023
while IDASAL 2050 at ~6.6% trade ~70bp outside INDON 2050 vs ~125bp at end-2023. Neutral on PLNIJ long end bonds like
PLNIJ 2050 at ~6.8% which trade ~85bp outside INDON 2050 vs ~90bp at end-2023, but advocate switching from IDASAL 2050
/ FRIDPT 2052 to PLNIJ 2050. Neutral on PERTIJ long end bonds like PERTIJ 2050 at ~6.6% which trade ~65bp outside INDON
2050 vs ~55bp at end-2023, as well as PGEOIJ 2028 at ~5.0% and the recently issued PERHUL 2030 at ~5.3%. Several quasis
have weak ESG profiles, i.e. PLNIJ (coal exposure), IDASAL (coal exposure), while there is further bond supply risk this year.
Growth target will be challenging to meet while fiscal deficits will remain wide. 1Q25 GDP growth was disappointing, even before
the tariff impact, rising marginally to 5.4% from 5.3% in 4Q24, largely due to a more modest rebound in investment spending. As a result,
our economists lowered their GDP growth forecasts for 2025/2026 to 5.3%/5.6% from 5.9%/6.1%. This is below the government’s GDP
growth projection of ~6-8% for 2025. They also forecast only a slight narrowing in the fiscal deficit to 5.5% of GDP in 2025 from 5.6% in
2024, above the government’s MTFF target of 5.3%. They believe MTFF targets, which include reducing the fiscal deficit to 3% by 2028,
will be challenging to meet given spending priorities like flagship infrastructure projects, and dimming prospects for further tax reform.
Bond views:
• Neutral on the PHILIP complex on fair valuations, with the most recently issued PHILIP 2050 at ~6.0% / ~Z+180bp.
Bond views:
• Neutral on the MALAYS sukuk complex, like MALAYS 2051 at ~5.6%. Valuations are tight but remain technically well supported.
• Neutral on the KNBZMK complex. KNBZMK 2031 sukuks at ~5.0% trade ~30bp outside MALAYS 2031 at ~4.7%, which is fair.
12
Trading Strategy: Asian Sovereigns & Quasis
Frontier Sovereigns
Country
Views and Recommendations
•
Bond views:
• Underweight the MONGOL complex with MONGOL 2030 at ~97 / ~7.4%. Valuations look rich amid the weak commodity price
environment and rising political noise, but we acknowledge there is limited near-term refinancing risk post previous savvy LMEs.
• Underweight government guaranteed CITULA 2027 at ~99.5 / ~8.0%, or just ~70bp outside MONGOL 2027 at ~7.3%.
• Broadly Neutral on the private banks but prefer GLMTMO 2027 at ~100.75 / ~10.6% over TDBM 2027 at ~95.5 / ~10.5%.
•
Macro conditions continue to stabilize but geopolitical tensions with India have risen: GDP growth improved to 1.7% in 2QFY25
(October-December 2024) from 1.3% in 1QFY25 (July-September 2024) on higher-than-expected growth in the services sector. S&P and
Fitch both forecast FY25 GDP growth to improve to ~3% from 2.5% in FY24. Inflation has also been trending lower (with CPI moderating
to 0.3% in April from a peak of 38% in May 2023), enabling the SBP to successively cut interest rates (the latest by 100bp to 11.0% on 5th
May) to support growth. The current account position has also improved to a surplus of USD1.86bn in 9M25 (July-March) vs a deficit of
USD1.65bn in 9M24, helped by record remittances and a contained trade balance due to lower oil prices. FX reserves have improved to
USD10.3bn in May vs USD9.1bn in July 2024. This is however still small in comparison to external debt repayments of ~USD22-23 per
year over FY25-27 and Pakistan will remain reliant on financing from the IMF and other partners to meet these obligations. On a positive
note, it is broadly on track with its IMF program, with the IMF completing the first review and approving a USD1bn loan disbursement. On
the other hand, India-Pakistan tensions rose to their highest level in 25 years during 7-10th May amid multiple rounds of retaliatory military
actions from both sides. A ceasefire was reached on 10th May, although it is a fragile peace amid accusations of violations by both sides.
Bond views:
• Neutral on the PKSTAN complex with PKSTAN 2031/2051 at ~78-85 / ~11.0-11.6% on fair valuations, with the complex already
rallying back above its pre-conflict levels amid the more constructive market backdrop post the US-China tariff de-escalation.
Mongolia
[B2 (Stb) / B+ (Pos)
/ B+ (Stb)]
Pakistan
[Caa2 (Pos) / CCC+
(Stb) / B- (Stb)]
•
•
Sri Lanka
[Caa1 (Stb) / SD
(Stb) / CCC+]
•
Sri Lanka has made good progress in restoring its credit fundamentals, but vulnerabilities remain. GDP growth has recovered to
5.4% in 4Q25, the quickest since mid-2021, with full-year 2025 GDP growth of 5.0% vs -2.3% in 2024. External vulnerability has reduced,
with the suspension in external debt payments and financing inflows from the IMF and other development partners enabling Sri Lanka to
rebuild its FX reserves to USD6.24bn in April from USD1bn in November 2021, sufficient to cover ~3 months of imports. Fitch projects FX
reserves to reach USD8.7bn by 2026. USD-LKR has appreciated to <300 from ~360-370 during the crisis. Nevertheless, US tariffs (44%
at the time of writing, but will likely be negotiated down) will hurt the growth recovery and pressure the current account deficit. While debt
restructuring has reduced the government’s debt service burden and liquidity risks, debt levels will likely remain high in the medium-term.
Bond views:
• Small Overweight SRILAN complex. Prefer to position in macro-linked bonds (MLBs) like SRILAN 2033 MLBs at ~75 / ~8.4%,
SRILAN 2036 MLBs at ~75 / ~8.6% and SRILAN 2038 MLBs at ~75 / ~8.9% as we see a decent likelihood of SRILAN being
able to achieve at least upside scenario #2 (i.e. 2025-27 average nominal GDP growth of >USD99bn) of the MLB triggers.
13
Trading Strategy: Asian Financial Institutions
Chinese Banks/NBFIs
Sector
Banks
Views and Recommendations
•
Bond views:
• Neutral on ICBCAS c2026 AT1s at ~5.4% YTC. Valuations are unexciting but will likely remain technically supported.
•
Bond views:
• Overweight FRESHK seniors like FRESHK 2028s at ~99 / ~Z+260-265bp / ~6.3-6.4% on attractive valuations. FRESHK
reported mixed FY24 results as net profits fell sharply but asset quality and capital were stable. On profitability, PATMI fell 38%
y-o-y to RMB3.86bn on a 6x y-o-y rise in provisions and 5% y-o-y fall in gross profits. By segment, the traditional financial leasing
segment saw revenue (interest income + fee income) decline 7% y-o-y to RMB21.7bn (i.e. 57% of revenue) while the industrial
operation segment saw revenue rise 10% y-o-y to RMB16.2bn (i.e. 43% of revenue). On asset quality, NPAs were up 1% h-o-h
but were flat y-o-y to RMB2.79bn with the NPA ratio up slightly to 1.07% (1H24: 1.04%, FY23: 1.04%). FEH continued to reduce
its exposure to the risky urban public utilities (i.e. LGFV) sector to 33.8% of interest-earning assets (1H24: 35.6%, FY23: 39.8%).
On capital, equity-to-assets improved to 13.6% from 13.3% in 1H24, but was lower than 14.3% in FY23. Gearing rose slightly to
84.1% (1H24: 83.7%, FY23: 83.6%). Overall, fallen angel risk has abated (S&P has a Stable outlook on its BBB- rating) while the
local government debt swap program (swapping high-risk LGFV debt with risk-free government bonds) will indirectly benefit FEH.
• Neutral on seniors of bank-affiliated leasing companies BOCAVI, CCBL, CMINLE, ICBCIL and CDBLFD/CDBALF considering
their strong parent bank support, notwithstanding their unexciting valuations at mid-to-high-4% yield.
•
Bond views:
• Overweight CFAMCI seniors, particularly CFAMCI 2029/2030s at ~91-96 / ~Z+185bp / ~5.6% and CFAMCI sub perps at ~99 /
~6.5% YTC, which will almost certainly be called in September 2025, on attractive valuations. CFAMCI saw a substantial 445%
y-o-y rise in PATMI to RMB9.62bn in FY24, supported by FV gains from other financial assets, its investments in BOC and CITIC
Ltd (boosting income and share of results from associates) and a large tax credit. These helped offset higher impairment losses,
FV losses on DDA and lower DDA income. Capitalization continued to strengthen (CAR rising to 15.69% from 15.11% in FY23)
while leverage reduced (leverage ratio down to 10.1x from 11.5x in FY23). CFAMCI (and the other national AMCs) will continue
to play an important policy role amid China’s economic downturn, and we expect government support to remain forthcoming.
• Small Overweight GRWALL seniors like GRWALL 2030 at ~86 / ~Z+175bp / ~5.6% (~45bp outside HAOHUA 2030) on slightly
attractive valuations. Post transfer of the MOF’s 73.5% stake in GRWALL to Huijin, which we view as indicative of continuing, as
opposed to diminishing, government support, we see room for GRWALL to compress towards wider SOE names like HAOHUA.
• Neutral on CCAMCL seniors/AT1s. We continue to view CCAMCL as the best AMC from a fundamental perspective, but this is
priced in with CCAMCL 2031 at ~90 / ~Z+130bp / ~5.1% (~5bp inside HAOHUA 2030) and CCAMCL AT1s at ~5.2% YTC.
• Neutral on ORIEAS seniors like ORIEAS 2030 at ~88 / ~Z+145bp / ~5.3% (~15bp outside HAOHUA 2030) on fair valuations.
•
Bond views:
• Neutral on PINGIN seniors like the most recently issued PINGIN 2034 at ~102 / ~Z+190bp / ~5.9% on fair valuations.
Leasing
AMCs
Insurance
14
Trading Strategy: Asian Financial Institutions
Hong Kong Banks
Sector
Views and Recommendations
•
Banks
•
•
•
Bank of East Asia (BNKEA):
• Reported better-than-expected FY24 results (given the challenges facing the HK economy and property market), with
higher profits and improving capital, but weaker asset quality. On profitability, net profits rose 12% y-o-y to HKD4.61bn as
lower impairment losses (-10% y-o-y to HKD5.59bn, comprising HKD5.15bn of impairments on loans/debt, of which ~51% of loan
impairments from Chinese CRE and ~22% from HK CRE) and decent non-interest income growth (+15% y-o-y to HKD4.45bn)
helped offset lower net interest income (-2% y-o-y to HKD16.5bn) and slightly higher operating costs (+2% y-o-y to HKD9.63bn,
with the cost-income ratio rising 0.4pp y-o-y to 45.9%). On asset quality, impaired loans increased 3% h-o-h and 1% y-o-y to
HKD14.5bn with the impaired loan ratio up 10bp q-o-q and 3bp y-o-y to 2.72%. On capital, the CET1 CAR improved to 17.7%
(1H24: 17.1%, FY23: 17.3%), but the Tier 1 and Total CAR declined slightly q-o-q to 18.7% (1H24: 19.2%, FY23: 19.4%) and
22.3% (1H24: 22.8%, FY23: 22.0%) as the bank redeemed the USD650m of BNKEA 5.875% c2024 AT1s in September 2024.
• HK commercial real estate exposure (CRE) declined to HKD61bn (i.e. 11.5% of loans) in FY24 from HKD65bn (i.e. 12.2%)
in 1H24 and HKD73bn (i.e. 13.7%) in FY23. ~84% is secured with the average LTV ratio at ~53%, based on the latest valuation
at end-2024. NPL ratio is ~6%, with management considering ~7.5% (~HKD4.6bn) to be “higher risk”. Management views its HK
CRE exposure is “manageable” but warned that it will take time for the issues to be resolved. China CRE exposure (loans/debt)
declined to HKD36bn (i.e. 4.9% of total loans/debt) in FY24 from HKD42bn (i.e. 5.9%) in 1H24 and HKD54bn (i.e. 7.7%) in FY23,
attributed to continued write-offs, with management noting that they have downgraded “nearly all” of their China CRE exposure.
• We are encouraged by BNKEA’s relatively stable results but believe it is not yet out of the woods with the still evolving
HK CRE situation and its provisioning level relatively low, leaving it exposed to further asset quality stress in the space.
Bond views – AT1s:
• Small Overweight BNKEA c2025 AT1s at ~99 / ~7.7% YTC as a reasonably attractive short-term carry play. Given BNKEA’s
solid core capital position, we expect BNKEA c2025 AT1s to be called in October 2025 even if new AT1s cannot be issued.
• Neutral on CINDBK AT1s at ~5.1% YTC / NANYAN AT1s at ~6.0-6.3% YTC / CHIYBK AT1s at ~8.0% YTC on fair valuations.
Bond views – T2s:
• Neutral on BNKEA 2034c2029 T2s at ~100 / ~6.6% YTC. Valuations are admittedly wide, but we prefer to be defensive on these
longer duration T2s as relatively low provisioning leaves it exposed to further asset quality pressure in HK/China CRE. That said,
BNKEA 2032c2027 T2s at ~98 / ~6.1% YTC could see some demand after BNKEA 2030c2025 T2s are called on 29th May 2025.
• Neutral on other HK T2s like SHCMBK 2033c2028 T2s at ~5.7% YTC, NANYAN 2034c2029 T2s at ~5.7% YTC, DAHSIN
2033c2028 T2s at ~5.8% YTC and CHIYBK 2032c2027 T2s at ~6.7% YTC on broadly fair valuations. DAHSIN also has a large
exposure to the HK CRE space of HKD29bn (i.e. 21.3% of loans) in FY24, albeit with higher % of secured loans and lower LTV
vs BNKEA. That said, we expect DAHSIN T2s to be relatively more stable vs BNKEA T2s, helped by their small issue sizes.
Bond views – LAC seniors:
• Neutral on BNKEA LAC seniors at ~5.4-5.5% on fair valuations.
15
Trading Strategy: Asian Financial Institutions
Hong Kong and Taiwan Insurance
Sector
Views and Recommendations
•
Bond views:
• Neutral on AIA subs like AIA c2026 sub perps at ~97.5 / ~5.5% YTC, AIA 2034 subs at ~99.5 / ~5.4%, AIA 2035 subs at ~96 /
~5.5% and AIA 2054 subs at ~89.5 / ~6.2% on broadly fair valuations. We remain very comfortable with the fundamentals of
AIA, one of the largest and most geographically diversified life insurance groups in Asia. AIA reported solid 1Q25 numbers, with
VONB +13% y-o-y to USD1.50bn and ANP +7% y-o-y to USD2.62bn, with the VONB margin +3.0pp y-o-y to 57.5%. Regionally,
AIA HK VONB +16% y-o-y, driven by growth across both the domestic and Mainland Chinese visitor (MCV) customer segments.
On the other hand, AIA China VONB -8% y-o-y due to changes in long-term investment return assumptions made at end-2024.
• Neutral on the FWDGHD complex but prefer FWDGHD 8.045% sub perps at ~100 as a decent coupon carry play with potential
to be called. FWD has again filed a HK IPO application (its fifth) although, given the more buoyant primary market and “realistic”
size of “several hundred million dollars” (vs USD3bn in 2021), we reckon there is a higher chance of success this time. Post IPO
(and potential Moody’s upgrade), we reckon FWD will try to issue new sub perps (with potential IG rating) to take out the 8.045%
sub perps. We also view FWDGHD 2029 junior subs at ~103.5 / ~Z+355bp / ~7.3% as a decent carry play. Their IPO call at 101
has come into focus again due to the revived IPO plans, but we believe the likelihood of it being triggered is not high. Recall they
were initially PPs placed with two anchor investors, with one of the them still holding a substantial amount at the time of writing.
We see no reason for FWD to antagonize this investor when it might have to count on them again to support future fundraising.
• Neutral on PCGIHD 2026 seniors at ~96.5 / ~Z+350bp / ~7.5%. Although valuations look optically wide, we see limited room for
material compression given the low coupon rate of 4.5% and limited visibility on how PCGI’s ability to refinance in 2026 (although
both PCGIHD 2024s ended up being redeemed in October/November 2024 without any drama, but also without any explanation).
•
TW lifers’ FX risk management in focus post the sharp TWD appreciation: To recap, TW lifers have sizeable exposure to overseas
investments, i.e. ~70% of their investment portfolio (or ~USD680bn), due to insufficient long-dated NTD investments to match their longdated liabilities. ~30% of overseas investments are naturally hedged from FX policies. Of the remaining ~70%, ~60-65% are hedged via
currency swaps/NDFs where hedging costs are high. As an alternative to direct hedging, TW lifers have also built FX volatility reserves,
allocating funds into a special reserve designed to absorb losses from unfavorable FX movements. This grew to NTD284bn at end-March
2025 from NTD220bn at end-2024 and NTD92bn at end-2023, helped by strong USD appreciation during 2024, although S&P estimates
that the recent TWD appreciation could reduce reserves back to end-2023 levels. TW lifers will no doubt take a material P&L hit post the
TWD appreciation. NSINTW reported a net loss of NTD9.1bn in April (trimming 4M25 net profits to NTD3.1bn), reflecting its higher-thanpeers FX risks, while CATLIF posted a more moderate net loss of NTD2.6bn. On the other hand, their capital (RBC ratio: CATLIF 359%,
NSINTW 299%) should remain adequate even after taking the hit. Overall, we expect regulatory support/forbearance to be availed to the
sector given their systemic importance, while there is also the potential for capital injections from shareholders should the need arise.
Bond views:
• Underweight CATLIF 2034 / 2039c2034 T2s at ~95.5-101 / ~Z+185-195bp / ~5.8-5.9% on relatively tight valuations. Neutral on
NSINTW 2034 T2s at ~94 / ~Z+230bp / ~6.3%, at ~45bp outside CATLIF 2034 T2s, on fair valuations. There is bond supply risk
16
as TW lifers will likely remain regular sub issuers to bolster capital in preparation for IFRS17 / TW-ICS implementation in 2026.
HK Insurance
Taiwan Insurance
•
Trading Strategy: Asian Financial Institutions
Korean Banks/NBFIs
Sector
Views and Recommendations
•
Banks
•
•
Bond views:
• T1s: Neutral on KYOBOL 2052c2027 T1s at ~100.5 / ~5.5% YTC on fair valuations. Neutral on TYANLI c2025 T1s at ~100 /
5.8% YTC which will almost certainly be called in September 2025 post the T2 issuance for refi, but are wrapped around par.
• T2s: Small Overweight TYANLI 2035c2030 T2s at ~100.5 / ~Z+235bp / ~6.1% YTC on slightly attractive valuations, at ~100bp
outside WOORIB 2028 T2s. Korea’s FSC gave WOORIB conditional approval to take over TYANLI in early May amid uncertainty
of this outcome previously due to WOORIB’s management rating downgrade. This led to Moody’s upgrading its IFSR by a notch
to A3 from Baa1, with its T2 rating upgraded to Baa2 from Baa3. In our view, a capital injection from its new parent (to bolster its
solvency ratio of 155.5%) will also be forthcoming. Neutral on HLINSU 2032c2027 T2s at ~96.5 / ~5.5% YTC on fair valuations.
•
Bond views:
• Neutral on DAESEC seniors like DAESEC 2028/2029 at ~Z+140-155bp / ~5.1-5.3%. We still view DAESEC as the strongest
securities company from a fundamental perspective, with one of the lowest PF loan/guarantee exposure among peers at 6.6% of
equity, but this is priced into valuations. Neutral on other seniors like HANFGI 2028 at ~Z+130bp / ~5.1% on fair valuations.
•
Bond views:
• Neutral on seniors like SHINCA 2029 at ~Z+140bp / ~5.1% and HYNCRD 2029 at ~Z+140bp / ~5.1% on fair valuations.
Insurance
Securities
Credit Card
Profitability should weaken and asset quality will come under further pressure amid the more challenging macro backdrop: On
profitability, among the major financial groups (i.e. KB, Shinhan, Hana and Woori), the former three saw solid net income growth (+963% y-o-y) in 1Q25, but this was due more to the absence of large ELS-related compensation costs taken in 1Q24, with PPOP growth
relatively weak (-3% to +6% y-o-y). Woori, which was not affected by ELS provisions, saw net income -25% y-o-y with PPOP -14% y-o-y.
On asset quality, gross NPL ratios were generally higher (i.e. Woori +12bp q-o-q to 0.69%, Hana +8bp q-o-q to 0.70%, KB +9bp q-o-q to
0.76%, Shinhan +10bp q-o-q to 0.81%), with provisioning levels (from 115% at Hana to 133% at KB) generally falling. On capital, grouplevel CET1 ratios were stable to higher (i.e. KB +0.2pp q-o-q to 13.7%, Shinhan +0.1pp q-o-q to 13.3%, Hana flat q-o-q at 13.2%, Woori
+0.3pp to 12.4%). Looking ahead, pressure on NIMs and overall profitability will persist amid the weak operating environment, while asset
quality, particularly in SME and unsecured personal loans, will face further pressure, but capital/liquidity positions will likely remain stable.
Bond views:
• AT1s: Neutral on the most recently issued WOORIB c2029 AT1s at ~100.5 / ~6.2% YTC, as well as the older, shorter effective
duration KEBHNB c2026 AT1s at ~97 / ~5.9% YTC and SHINFN c2026 AT1s at ~97 / ~6.1% YTC, on fair valuations.
• T2s: Neutral on bullet T2s like SHNHAN 2034 T2s at ~99.5 / ~Z+185bp / ~5.8%, as well as the older, shorter dated CITNAT
2030 T2s at ~87 / ~Z+145bp / ~5.3% and WOORIB 2028 T2s at ~100 / ~Z+135bp / ~5.1% on fair valuations.
• Seniors: Underweight seniors from policy banks like EIBKOR / INDKOR / KDB (5-year seniors at ~Z+75-95bp / ~4.5-4.7%),
and commercial banks like CITNAT / KEBHNB / SHNHAN / WOORIB (5-year seniors at ~Z+100-110bp / ~4.7-4.9%) on tight
valuations, likely further bond supply (which could weaken bond technicals) and the more challenging macro backdrop.
17
Trading Strategy: Asian Financial Institutions
Indian Banks/NBFCs
Sector
Views and Recommendations
•
Bond views:
• Overweight HDFCB c2026 AT1s at ~96 / ~7.0% YTC and AXSBIN c2026 AT1s at ~96.5 / ~7.0% YTC as good carry plays.
• Neutral on seniors of public sector banks like EXIMBK/SBIIN/CBKIN and private sector banks like HDFCB/ICICI.
•
Bond views – Government-linked NBFCs:
• Neutral on seniors of INRCIN / POWFIN / RECLIN. POWFIN 2031 at ~Z+160bp trade ~15bp outside EXIMBK 2031, near the
~20bp past year average. Valuations are tight, but material decompression is unlikely given the relatively benign macro backdrop.
Bond views – Privately-owned NBFCs:
• Small Overweight MGFLIN 9/2027 (WAL) at ~99 / ~7.7% yld to avg life which, at ~85bp outside MUTHIN 8/2027, offer some
upside upon a successful Bain Capital acquisition. MGFLIN reported weak 4QFY25 results, plunging into net losses of INR1.91bn
(vs net profits of INR5.62bn a year ago) while AQ worsened (gross NPA ratio at 2.77% vs 2.46% in 3QFY25), but the standalone
Total CAR was stable at 31% vs 30% in 3QFY25. On the ongoing Bain Capital acquisition, MGFLIN has submitted applications to
various regulatory authorities for approval and are awaiting such approvals, and the deal is expected to close before year end.
• Neutral on the fundamentally better NBFCs like SHFLIN 2028 at ~98.5 / ~Z+305bp / ~6.8% and MUTHIN 10/2028 (WAL) at ~98 /
~7.0% yld to avg life on fair valuations. SHFLIN posted solid 4QFY25 results with higher profits (PAT +10% y-o-y to INR21.4bn),
improving AQ (stage 3 assets -12% q-o-q to INR118.4bn with the gross NPA ratio -83bp q-o-q to 4.55%) and stable capital (Tier
1 CAR at 20.03% vs 20.34% in 3QFY25). Meanwhile, MUTHIN posted decent 4QFY25 results with higher profits (consolidated
PAT +22% y-o-y to INR14.4bn) and stable AQ (stage 3 assets -10% q-o-q to INR37.0bn with the gross NPA ratio -81bp q-o-q to
3.41%), but capital worsened further (Tier 1 CAR at 23.0% vs 24.4% in 3QFY25), which is something to monitor going forward.
• Neutral on PICAHF 12/2027 (WAL) at ~99 / ~8.1% yld to avg life on fair valuations post recovery. Parent Piramal Enterprises had
mixed 4QFY25 results, with weaker profits (consolidated PAT -26% y-o-y to INR1.02bn) and AQ (stage 3 assets +3% q-o-q but
+36% y-o-y to INR19.5bn with the gross NPA ratio flat q-o-q but +40bp y-o-y at 2.8%), although capital/liquidity was stable (Total
CAR stable at 23.6% vs 23.7% in 3QFY25). On a positive note, it continued to run down its legacy AUM by -33% q-o-q and -53%
y-o-y to INR69.2bn (i.e. 9% of total AUM, down from 13% in 3QFY25). Overall, we view the results as broadly credit neutral.
• Neutral on IIFOIN 7/2028 at ~97 / ~Z+615bp / ~9.9% on fair valuations. IIFOIN reported weak 4QFY25 results with lower profits
(consolidated PATMI -44% y-o-y to INR2.08bn) and capital (standalone Total CAR down to 18.5% vs 22.0% in 3QFY25), but AQ
was stable (consolidated gross NPA ratio -19bp q-o-q to 2.23%). Weak profitability in FY25 as a given due to RBI’s gold lending
ban in 1Q-2QFY25, but the worsening in standalone capital is something to monitor (albeit consolidated capital looks adequate).
• Neutral on IHFLIN 7/2027 at ~98 / ~Z+700bp / ~10.8% on fair valuations. IHFLIN posted another in-line set of results in 4QFY25
with stable profitability (PAT +7% q-o-q and +1% y-o-y to INR3.24bn) and stronger capitalization (Total CAR improved to 34.8%
vs 34.1% in 3QFY25), but slightly weaker asset quality q-o-q (gross NPA ratio +16bp q-o-q to 1.3%). It saw continued progress in
shifting to its asset-light business model (“growth AUM” +7% q-o-q and +41% y-o-y to INR374.5bn, or 60% of consolidated AUM)
while running down its legacy portfolio (“legacy AUM” -8% q-o-q and -36% y-o-y to INR248.9bn, or 40% of consolidated AUM).
18
Banks
•
NBFCs
Trading Strategy: Asian Financial Institutions
Southeast Asian Banks/NBFIs
Sector
Views and Recommendations
•
Bond views:
• AT1s: Overweight GESP c2032 AT1s at ~97 / ~5.9% YTC on relatively attractive valuations for a very high-quality SG lifer.
• T2s: Neutral on banks’ callable T2s like OCBC 20342c2029 T2s / UOBSP 2032c2027 T2s at ~5.0% YTC on fair valuations.
•
Our economists sees a high likelihood of Moody’s downgrading the Thai sovereign rating by one notch in the next 12 months,
which will lead to a corresponding downgrade of the banks’ senior ratings: A sovereign downgrade will also lead to a downgrade of
BBLTB’s baa1 BCA, pushing the T2 rating (currently Baa3) into HY territory. BBLTB 2036c2031 / 2040c2035 T2s will be most impacted
given their current “full IG” ratings. Most of the other AT1s/T2s are shorter dated and/or already HY rated and should be less impacted.
Bond views:
• AT1s: Small Overweight KTBTB c2026 AT1s at ~98 / ~6.7% YTC as a decent short-dated carry play. We expect them to be
called in March 2026. Neutral on KBANK c2027 AT1s at ~95.5 / ~6.8% YTC on fair valuations. Neutral on BBLTB c2025 AT1s
and KBANK c2025 AT1s. We expect both to be called in September/October 2025, but they are already wrapped around par.
• T2s: Small Overweight KBANK T2s at ~96.5 / ~6.1% YTC as a decent short-dated carry play. Switch from MUANTH T2s into
KBANK T2s to move up to the parent and pick up ~20bp. Underweight BBLTB 2036c2031 T2s at ~86.5 / ~6.1% YTC and
2040c2035 T2s at ~97 / ~6.5% YTC as we believe their elevated fallen angel risk will remain an overhang on valuations.
• Seniors: Neutral on BBLTB/KBANK 2028 at ~Z+110-125bp / ~4.9-5.0% / BBLTB 2034 at ~Z+160bp / ~5.6% on fair valuations
which are pricing in some downgrade risk (BBLTB/KBANK 2028 are trading close to Baa2/BBB rated BMRIIJ 2028 at ~Z+120bp).
Neutral on MTCTB 2028 at ~99 / ~Z+350bp / ~7.2% on fair valuations. MTCTB’s focus on lending to lower-income individuals will
likely lead to greater asset quality pressure amid the more challenging macro backdrop going forward, but this is largely priced in.
Singapore
•
Thailand
•
Bond views:
• AT1s/T2s: Small Overweight BBNIIJ c2027 AT1s at ~95 / ~7.4% YTC on slightly attractive valuations, notwithstanding the
uncertain macro backdrop (high fiscal risks, weaker domestic demand, Danantara), weaker asset quality (LAR ratio +0.6pp q-o-q
to 10.9% in 1Q25), and stricter coupon distribution language (“distributable reserves” defined as prior year net profits in Indonesia
vs retained earnings for other Asian jurisdictions). Neutral on short dated BBNIIJ 2026 T2s at ~98 / ~6.2% on fair valuations.
• Seniors: Neutral on BBKPIJ 2027 at ~98 / ~Z+275bp / ~6.5% whose valuations look fair post their rebound from the lows at ~95.
BBKPIJ is very small and exhibits atrocious (but slightly improving) standalone fundamentals, but parental support from CITNAT
should be forthcoming. Neutral on BMRIIJ 2028 at ~Z+120bp / ~5.0% and BBNIIJ 2029 at ~Z+155bp / ~5.3% on fair valuations.
•
Bond views:
• AT1s: Neutral on RCBPM c2025 AT1s at ~99.5 / ~8.4% YTC on fair valuations. We expect them to be called in August 2025.
• Seniors: Remain Underweight smaller banks SECBPM 2029 / RCBPM 2029 / PNBPM 2029 at ~Z+135-155bp / ~5.1-5.3% on
tight valuations. Neutral on larger banks BPIPM 2029 / MBTPM 2029 at ~Z+105-115bp / ~4.8-4.9% on fair valuations.
Indonesia
Philippines
19
Trading Strategy: Asian Financial Institutions
Australian and Japanese Banks/NBFIs
Sector
Views and Recommendations
•
Bond views:
• AT1s: Neutral across ANZ c2026 AT1s at ~101.5 / ~5.4% YTC, WSTP c2027 AT1s at ~98.5 / ~5.7% YTC and MQGAU c2027
AT1s at ~100 / ~6.1% YTC, i.e. ~40bp outside WSTP AT1s, on fair valuations. All of them will almost certainly be called at their
first call dates considering APRA’s confirmation last December to phase out AT1s with effect from 2027, but this is priced in.
• T2s: Broadly Neutral on major banks’ callable and bullet T2s at mid-to-high-5% for the more on-the-run paper on fair valuations.
Neutral on MQGAU 2036c2031 T2s at ~87 / ~5.8% YTC and bullet T2s like MQGAU 2033 T2s at ~105 / Z+205bp / ~5.9% on fair
valuations. They trade ~15-25bp outside major banks’ T2s, which fairly prices in their one notch lower rating. MQGAU posted
solid FY25 results, with PATMI +5% y-o-y to AUD3.72bn (2H25 PATMI +31% h-o-h to AUD2.10bn), on higher profit contribution
from Macquarie AM (+33% y-o-y to AUD1.61bn) and banking and financial services (+11% y-o-y to AUD1.38bn), but contribution
from commodities and global markets (-12% y-o-y to AUD2.83bn) declined. Capital remained strong with the overall group capital
surplus at AUD9.5bn and the banking group Level 2 CET1 CAR at 12.8% (“internationally comparable” CET1 CAR at 17.6%).
•
Bond views:
• T2s: Neutral on QBEAU 2035c2030 T2s at ~100 / ~Z+200bp / ~5.8% YTC on fair valuations. in 1Q25, QBEAU reported decent
GWP growth of +7% y-o-y to USD8.3bn, driven by rate increases and further expansion in the International and North America
markets, although this was partly offset by a ~USD100m drag from run-off of non-core lines in North America. For 4M25, net cost
of catastrophe claims totaled ~USD420m, i.e. ~77% of its 1H25 catastrophe allowance of USD549m, driven by the LA wildfires,
Queensland floods, Cyclone Alfred, etc. The FY25 outlook remains unchanged with GWP expected to grow at “mid-single digits”
after accounting for a ~USD250m drag from non-core run-off in North America, with the group combined ratio target at 92.5%.
•
Bond views:
• AT1s: Overweight SUMIBK c2034 / c2035 AT1s at ~97-99 / ~6.8-6.9% YTC on attraction valuations. They have lagged amid the
recent rally in the AT1 space, with SUMIBK c2034 AT1s now trading just ~25bp inside HSBC c2034 AT1s at ~7.0% YTC vs the
wides of ~75bp inside in early April post the “Liberation Day” sell-off.
• T2s: Neutral on megabanks’ bullet T2s like SUMIBK 2043/2044 T2s at ~97.5-102.5 / ~Z+175-185bp / ~6.0-6.1% which look fair.
• TLAC seniors: Neutral on megabanks’ TLAC seniors on fair valuations, with belly at ~4.9-5.0% and long end at ~5.5-5.7%.
•
Bond views:
• Overweight NIPLIF c2034 subs / DAIL c2035 subs / MYLIFE c2035 subs at ~98-101 / ~6.3-6.4% YTC on relatively attractive
valuations. Small Overweight ASAMLI c2031 subs at ~89.5 / ~6.4% YTC on slightly attractive valuations which at ~60bp outside
NIPLIF c2031 subs at ~5.8% YTC (vs as tight as ~15-20bp over last November) have more have than priced in their smaller size
and two notch lower rating (BBB vs A3/A- for NIPLIF subs). ASAMLI reported solid 9MFY24 results with PATMI +116% y-o-y to
JPY23.6bn and the solvency margin ratio remaining strong at 1,027% (well above the regulatory minimum requirement of 200%).
Neutral on smaller SUMILF c2034 subs at ~97 / ~6.3% YTC; we advocate switching into NIPLIF c2034 subs at flattish yields.20
Australian Banks
Australian Insurers
Japanese Banks
Japanese Life
Insurers
Trading Strategy: Asian IG Corporates
China IG Corporates – Central SOEs
Views and Recommendations
Sector Views
(Neutral)
• The Central SOE space has always been trading as a safe haven with strong technical support and no credit concerns given
solid government support. With strong policy roles, solid company profiles, and the low interest rate environment onshore,
Central SOEs can issue bonds at <2.5% for MTNs and <3% for perps onshore. With such a cheap funding environment and less
need for overseas capex, there has been very limited bond supply in the Central SOE space, which has further intensified
technical support for the space, leading to tight but stable bond valuations. This theme did not change much even during the
“Liberation Day” drama in April and we saw strong holding power with limited moves on geopolitical noises.
Bond Views
• The spread between lower-tier Central SOEs (i.e. HAOHUA/SINOCH) and higher-tier Central SOEs widened immediately after
“Liberation Day” to ~80bp but quickly normalized to ~50bp currently. We are Neutral on lower-tier Central SOEs and view the
current spread differential between lower-tier and higher-tier Central SOEs as fair. However, we are comfortable going down the
credit curve to pick up additional yield and are happy to buy-on-dip if there is any panic on the back of elevated geopolitical or
sanction risks, expecting less volatility after several rounds of reshuffling in the investor base during previous selloffs.
• While Central SOEs’ perps now offer ~15-20bp of premium versus straight bonds, we are Neutral on the perps, believing they
will likely hold up well considering no fundamental concerns and lack of carry elsewhere.
Spread between lower-tier versus higher-tier Central SOEs
21
Trading Strategy: Asian IG Corporates
China IG Corporates – Local SOEs and LGFVs
Views and Recommendations
•
•
Top-Down
Design Debt
Swap and
Decent Funding
Channels
•
•
•
The debt swap program, swapping high-risk LGFV debt with low-risk local government bonds, should effectively prevent credit
events in the near-term. In November 2024, the Chinese government unveiled the latest round of the local government hidden debt swap
program of RMB10trn over five years. The program showed strong top-down support to tackle local government debt. It includes a one-off
RMB6.0trn local government special bond (LGSB) quota and an annual RMB0.8trn LGSB quota for five years. Moreover, interest burden can
be reduced with the swap, with an estimated RMB600bn of savings in interest payments for local governments over five years.
We expect credit spreads to continue to remain tight, with improving investor confidence on the back of the consensus of lower
credit risk within the debt swap period. LGFV bond maturities are concentrated in 2025-27 while issuance also picked up for refinancing,
but we have seen a trend of CNH issuance to replace USD issuance at a cheaper cost. For 2025 YTD, the space has issued USD18.3bn in
USD and RMB21.3bn in CNH, while the remaining maturities are USD20.2bn and RMB4.9bn in USD/CNH for 2025.
Meanwhile, the government is requesting to control the level of LGFV debt and is looking to expedite the transition of LGFVs to Local SOEs
for them to bear their own business risks. Referencing the previous three rounds of debt swaps, we view debt swap programs as essentially
more of kicking the can down the road while replacing hidden debt with debt on balance sheet. Thus, the unresolved debt burden for those
LGFVs that did not finish the reform after the debt swap period will still depend largely on policy afterwards.
The policy should be particularly favorable for the weaker names, but we prefer to stay at the short end given uncertainty on any
shift in policy tone afterwards. Thus, we are Overweight on Local SOEs and LGFVs with short tenors (2025-26) and we also prefer
>1-year bonds versus 364-day bonds, which need NDRC quota.
We continue to like CPDEV 2026-2029 at 6.0-7.0% as a decent carry play, especially after it attracted a strong book size when it did the new
issuance this year (10.0x/7.8x book for the USD450/USD500m issuance). We see CPDEV as a rare Beijing LGFV which still offers a decent
yield pickup versus peers given its property related business.
LGFV maturities are concentrated in 2025-27
Source: Bloomberg, Nomura. Note: As of 23 May 2025
CNH issuance picked up more than USD
Source: iFind, Minsheng Securities, CMBI Securities; Note: As of 31 December 2024
LGFVs outperformed with less volatility
Source: Bloomberg, iBoxx TRI; Note: Index normalized as of 1 January 2023.
22
Trading Strategy: Asian IG Corporates
China IG Corporates – China Tech
Benchmark Tech Names (BABA, TENCNT, BIDU, JD)
• The China tech space has experienced a booming trend at the beginning of the year with the launch of Deepseek. On the credit side, given the expensive
Central SOE space, less analyzable Local SOE space and investors’ reduced risk appetite in the shrinking property space, it has become one of the few
investable candidates as a China beta play. TMT names have in general delivered stable results with strong credit metrics in 2024 and benefited from a
relatively more supportive policy environment. Moreover, with more interest from Chinese investors, valuations have tightened to historical tight levels with
the spread difference of low beta names (BABA, TENCNT, BIDU, JD) versus US peers tightening to 27bp before the April selloff. The spread difference
widened to ~40bp at once but quickly compressed back to the current ~35bp level.
• Nevertheless, there has been some geopolitical noises including the impact of tariffs and potential risks of being placed on the sanction list. However, we
expect these headwinds to be well absorbed by domestic buyers’ support and net bond redemption technicals.
•
Tencent was added to CMC/Section 1260H list, the restriction list for Department of Defense (DoD), which has caused some geopolitical concern.
•
We expect a net redemption trend in the TMT sector, which has created supportive technicals, and we see companies issuing CB/EB/CNH bonds
instead for cheaper financing.
• Despite seeing expensive valuations for low beta tech names, we expect the space to hold up well with robust technical support, limited
investable beta candidates, and solid fundamentals sitting on sufficient net cash. We maintain our view that we still like the space and are happy
to buy-on-dip on any selloff caused by geopolitical noises.
23
Trading Strategy: Asian IG Corporates
China IG Corporates – China Tech
High Beta Tech and Hardware Names (MEITUA, XIAOMI, WB, LENOVO, AACTEC)
• We turned Neutral from Overweight on the high beta tech names after the >90bp tightening in 2024. With improving fundamentals and lack of new issues,
high beta tech names trade ~40bp outside benchmark tech names, versus ~30bp at end-2024 and the ~100bp 3-year average, although slightly widened
from the ~20bp tights in February.
• Although seeing relatively tight valuations, we expect these tight levels to be the new norm, supported by continuous fundamental improvement
and the strong market backdrop with not many high beta candidates to invest in, unless we see: (1) aggressive bond issuance again, (2) dramatic
fund outflows again, or (3) unexpected material fundamental concerns.
• With improving fundamentals and lack of new supply, credit spreads have compressed materially. Amid the tariff risk that we mentioned in 2025 Outlook,
WB outperformed LENOVO and are now only ~5bp wider than LENOVO. With a temporarily tariff de-escalation, and the potential repurchase pipeline, we
view LENOVO now looks fair versus other peers. On Trump policy risk including potential tariffs, we see the potential order of impact as
WB/MEITUA < XIAOMI < AACTEC < LENOVO.
Bond Views
•
Overweight TME 2030 at Z+107bp as one of the wider A rated TMT name with strong
parent, high net cash, and stable cash cow business with solid market share.
•
Small Overweight MEITUA 2028-2030 at Z+105-124bp with strong business
performance, solid cash buffer, decent deleveraging story and domestic-focused
business profile. At end-2024, it had strong net cash of RMB126bn (+RMB14.3bn q-o-q)
and gross leverage of 1.3x (significantly deleveraged from 2.5x at end-2023). We see
manageable impact from a credit perspective from competition of JD entering the food
delivery business, while the expansion to Saudi Arabia might create some loss in FY25.
•
Small Overweight AACTEC 2026-2031 at Z+112-177bp with potential positive rating
movement although the name is still bearing potential impact from end customer
demand due to uncertainties in tariff policies.
•
Neutral on LENOVO 2028-2032 at Z+124-180, we saw a large swing in the LENOVO
curve given it is the only TMT/hardware name that is exposed to US tariff risk (~30% of
revenue in US). The curve rallied back with the tariff de-escalation while the company
still should have ~USD1bn of proceeds left for bond repurchase from the previous CB
issuance after repaying the April USD bonds.
24
Trading Strategy: Asian IG Corporates
China IG Corporates – Industrial POEs
Views and Recommendations
Sector View
• The space has in general rallied quite a lot and has become relatively tight versus their attractive valuations previously. That said,
we expect them to remain well supported as they are still offering relative value versus low beta tech names or Central SOEs,
especially considering that most of the names have no liquidity issues and will mature in the next 1-2 years. We therefore still
view the space as good to hold but are Neutral given valuations.
Bond Views
• Overweight ZHOSHK 2026-2028 at Z+182-308bp as one of the few high beta China IG names that still offer decent yield due to
concerns on the weak auto industry, offering >150bp of spread pickup versus other BBB names. The name widened significantly
during the April sell-off and remains a laggard while others have mostly rallied back, and should have already priced in weak
gasoline car sales and potential rating downgrade. Overall, we see ZHOSHK continuing to face challenges in new car sales while
the progress on EV distribution needs further tracking. However, the stable growth in after-sale recurring income and light capex
should offer decent buffer for its cash flows, and we expect gross margin to bottom out in 2025.
• Overweight CONAMP 2030 at Z+108bp with solid fundamentals, especially after the successful HK listing. It has maintained its
dominant share in the Chinese domestic market, industry-leading profitability, and expansion in the ESS sector and overseas
markets. In our view, the company is also less impacted by Trump’s policy as 70% of its revenues are from China and US market
exposure is only in the single-digit %. While revenue grew 6% y-o-y in 1Q25, partly impacted by lower ASPs, gross profit margin
improved another 1.2pp y-o-y to 24.4% benefiting from much lower lithium prices. Moreover, CATL successfully closed the
HKD35.7bn HK listing (to fund its construction of battery plants in Hungary), and we see further improvement in cash position in
the near-term (sitting on net cash of RMB185bn by end-1Q25).
• Neutral on SFHOLD 2026-2031 at Z+64-89bp, underpinned by its solid business operation and bond tenders that further support
their technicals. The company just announced an up to USD350m tender offer for SFHOLD 2030 and 2031 with a Modified Dutch
Auction procedure from T+55bp/T+57bp (Z+92bp/86bp), indicating a strong liquidity position.
25
Trading Strategy: Asian IG Corporates
Hong Kong IG Corporates
Sector
Views and Recommendations
•
Hong Kong IG
(Underweight)
Cautious on HK IG. HK IG remained relatively weak given the weaker property market fundamentals while there was big supply in
several high-quality non-property names. Housing prices remain challenged even after policy easing, while both retail and office
landlords are under pressure. Geopolitical noise has also created some volatility. We expect valuations of high-quality non-property
names to remain at the tight end, but we expect potential revaluation of property names, especially the landlords.
• Our economists forecast 2.3% GDP growth for HK in 2025, seeing growth headwinds with continued pressure on personal consumption
and trade uncertainties on tariff policy. Retail sales continued to be subdued (-6.5% in 1Q25, -3.5% y-o-y in March) given a shift in customer
behavior with a persistent trend of northbound travel over the weekends and public holidays.
• The HK IG space has widened 6bp YTD to an OAS of 77bp, tightened back 13bp from the “Liberation Day” sell-off, and stayed 8bp wider
than Korean counterparts versus the three-year historical average of 20bp. The non-property names bounced back to almost unchanged
(+3bp YTD) while property names widened 16bp YTD (recovered 19bp from the April sell-off). The weakness was mainly driven by
deteriorating fundamentals in the HK property names besides high-level geopolitical tensions, and we view the macro weakness as unlikely
to reverse in 2H25. Previous technical support also turned weaker with the jumbo deal of HKAA, which issued ~USD6.9bn in total in
HKD/CNH and USD out of USD11.8bn total issuance (USD9.6bn in USD) for the HK space, against USD5.6bn of bond maturities in 2025.
• We are Neutral on non-property names. We view utilities/transportation, i.e. CHINLP, HKE, HKAA and MTRC, as defensive and stable, with
utility names’ stable cash flows and ability to pass rising costs to customers, and transportation names’ indispensable roles. Neutral on
conglomerates like CKHH and SWIRE 2030 at Z+112-122bp with solid metrics and well diversified business profiles. On CKHH, the curve
initially tightened with the USD19bn deal proceeds from the Panama port sale but widened after the objection of the Chinese government.
In our view, the deal still has high uncertainty given it is under the scrutiny from the Chinese government but view the current spread at
Z+61-144bp has largely priced in the risk.
Spreads in HK IG remain tight
Source: Bloomberg, Nomura
Office landlords underperformed within the property sector
Source: Bloomberg, Nomura
26
Trading Strategy: Asian IG Corporates
Hong Kong IG Corporates (Cont.)
Sector
Views and Recommendations
•
•
Hong Kong
Property
(Underweight)
•
•
The weak property sector showed some signs of stabilization but remains at the low end. Residential sales remain subdued
although rents continue to rise. Although mortgage rates were helped by the recent significant drop in HIBOR (1-month HIBOR
dropped to 0.96% from 4.0% since May) due to injection of HKD liquidity, we expect demand to continue to be capped by the weak
outlook unless mortgage rates stabilize at a lower level. Residential house prices stabilized since April and are now -0.7% YTD but -28.4%
from the 2021 peak, according to the Centaline Property Centa-City Leading Index (CCL).
While policy has removed all additional stamp duties in February 2024 and further eased the LTV cap and include property purchase in the
capital investment entrant scheme last October, the residential market still saw a lack of demand amid the weak macro backdrop.
Helped by robust rental growth and the recent sharp decrease in HIBOR, mortgage rates versus gross rental yields have started to
be more balanced. We expect residential sales to pick up slightly but prices to remain stable in 2025. The HK prime rate was cut three
times since September 2024 by 62.5bp to 5.25% now, and mortgage rate dropped to <2% (H+1.3%/P-1.75%) due to the significant drop in
HIBOR rate in April (~3.5% before the recent HIBOR drop), versus the gross rental yield of ~3.5%.
While we do not expect significant improvement in the physical market, we believe fundamentals of most big HK IG property names should
remain stable with solid liquidity supported by strong funding channels. However, we might see rating pressure given deteriorating metrics with
lower margin, especially on landlords. However, the recent drop in HIBOR should relieve some interest burden for most HK property names
given their high percentage of floating rate debt (~49% on average, mainly bank loans).
House prices under pressure, rentals are solid
Source: Centaline, Nomura
Rental yield provides a buffer for house prices
Note: As of May 2024. Source: Centaline, Bloomberg, HKMC, Nomura
Residential transactions picked up in October
Source: Centaline, Nomura
27
Trading Strategy: Asian IG Corporates
Hong Kong IG Corporates (Cont.)
Sector
Views and Recommendations
•
•
Hong Kong
Property
(Underweight)
•
•
For landlords, both retail and office landlords are under pressure given subdued retail sales and the oversupply of office area. Increased
northbound travel and decreased spending by Mainland Chinese tourists have put pressure on retail sales growth (-6.5% in 1Q25, -3.5% y-o-y
in March). Office landlords have experienced deteriorated fundamentals with continuous negative rental revision (-39% lower than 2019 levels)
and higher vacancy rates (down slightly to 13.7% overall vacancy rate in March). Therefore, within the sector, we maintain our pecking order
as developers > retail landlords > office landlords.
We view HYSAN 2027-2032 at Z+140-207bp as fair after the recent selloff. With the resolution of their HYSAN 4.1% perp (replaced with the
new 7.2% sub-perp) and stabilized P&L, we view the current price should offer some buffer for the heavy construction capex until 2026 and
manageable downgrade pressure. CPREIT 2030, on the other side, has widened 100bp YTD to Z+299bp given a more aggressive downgrade
by Moody’s (downgraded to Baa2 to Baa3 with Negative outlook maintained). We agree the name has unpromising office net operating income
with uncertainties for the renewal of their anchor tenant but take comfort from its strong EBITDA/interest coverage at 2.4x in FY24 and thus do
not see liquidity concern. We believe retail landlords should face less pressure versus office landlords and still prefer WREICL 2030 over
HKLSP 2030 with the former being 14bp wider, but view HKLSP might benefit from the new capital recycling strategy to reduce net debt.
Among developers, we see SUNHUN and NANFUN as the beta for HK housing market sentiment while spread was largely unchanged YTD.
We view both names have decent liquidity to maintain flexibility in project launches and do not expect aggressive land acquisition plans.
However, we expect some noise on smaller HK property names that have near-term maturities, given the weak macro backdrop and less solid
funding channels. Asset disposals are also not easy given the less conducive market backdrop. While we view the market should have
differentiated the big IG names and the smaller non-rated names, we might still see some repricing risk given current tight valuations.
Office vacancy rate remains elevated and monthly rent continues to drop
Source: JLL, Nomura
Retail sales dropped amid the pressure of northbound traveling
Source: JLL, Nomura
28
Trading Strategy: Asian IG Corporates
Hong Kong IG Corporates (Cont.)
Sector
Views and Recommendations
•
We view FFL perps more as a lagged duration trade. While 30-year UST reached 5+% again, we see high uncertainty on rates and thus do not
see a clear trend for FFL perps. For high-quality IG FFL perps, the current perp-to-senior multiple at ~1.5x looks fair to hold as carry, given no
fundamental concerns and lack of supply. We are less interested in unrated FFLs due to issuers’ fundamental concerns.
•
Low step-up perps: Call probability depends on a decision of: (1) refinancing costs for various channels, (2) equity credit from a rating
perspective; and (3) impact to market. We tend to like low step-up perps when senior bonds trade significantly tighter than perps, i.e. perp-tosenior multiple significantly higher than peer average. As the higher rates environment might persist, these perps can potentially offer decent
yield pickup even if they are not called.
• We are Neutral on HYSAN 7.2% new sub perp at 98 cash price, 7.6% YTC / 8.1% YTP. As the new perp has a 100bp step-up in year
10.5 and is ranked ahead of “Junior Securities”, the new sub perp is rated only one notch lower than Hysan at Baa3. We view the structure
are still highly related to Hysan’s fundamentals and thus we are just Neutral on the perp given there is limited possibility for deleveraging
before the company finishes the heavy capex until 2026. The credit metrics are close to potential downgrade levels, and we also see
uncertainties on rating if HK property remains under pressure.
•
Hong Kong
Perps
•
We are Small Overweight CASHLD 4.0% perp at 97 cash price, 6.3% YTC / 8.3% YTP as a solid carry. We view the company has high
incentive to call the perp before the reset date of July 2026 given a high coupon reset of ~7.7% if not called (coupon payment will double to
~USD58m from USD30m). We see stable operations on HKT and PCCW and view the dividend pusher clause will protect the perps’
coupon payment as dividend payments are important for the complex. CAS is an intermediary holding company in between HKT trust and
PCCW and HKT trust has a continuing favorable dividend policy (52.3% held by CAS) with an expectation of ~HKD5.6-5.9bn annually
(HKD5.7bn paid in FY24).
High step-up perps: Majority of the high step-up perps are unrated and are linked more to individual liquidity situation.
•
Neutral on FAEACO 12.764% perp at 84 cash price (16% YTW). While we still like FAEACO’s high carry and decent asset portfolio which
is well diversified (76% of revenue not from HK in 1HFY25), we see lower possibility for the company to call the perp in the near-term given
weakening confidence in the HK property market as well as cash needs for the Australia project. Thus, we see limited upside before the
resolution of the Star Group situation as well as continuous drag on sentiment due to NWDEVL. The company failed to call in 1Q25 as
previously guided because Star Group, a partner of FEC's JV project in Australia, fell into liquidity issue early this January, and the
company is reserving cash to handle the project loan while keeping the net gearing ratio within 80%. The company finished its BC
Investment sale with ~HKD800m net proceeds while the Queens Wharf Project acquisition cost is low at ~AUD26m in cash and a switch of
33.3% interests in Gold Coast Project. The company might also have to take provision on the project that will push up its net gearing ratio.
With the perp now trading at 84 cash price, versus 89 before the coupon payment in mid-April, we view the downside is relatively limited
considering the high-quality assets, while upside will be driven more by the overall market sentiment.
29
Trading Strategy: Asian IG Corporates
Korean IG Corporates
Sector
Views and Recommendations
•
•
•
Korea
(Underweight)
•
•
•
We remain Underweight on Korea IG Corporates as the export-oriented country is likely to face growth headwinds in this
uncertain tariff regimen. Spreads have widened by a nominal ~10bp YTD, after widening up to ~30bp in the immediate aftermath
of the “Liberation Day” tariff announcement, and we still view valuations as relatively tight with room to widen with Korea still
being one of the major sources of net positive bond supply in Asia.
Continued uncertainty under Trump trade policy to be countered with domestic growth stimulus: Our economists reduced their
2025 GDP growth forecast to 1.0% (versus 1.7% forecast at the beginning of 2025, +2.0% in 2026) and expect the fundamental shift in
US trade policy to weigh heavily on Korea’s exports. As for monetary policy, they expect an additional 75bp of cuts to a terminal rate of
2.0% to coordinate with potential fiscal stimulus through the extra budget of KRW14trn, post the presidential election on 3 rd June 2025.
While chip exports have been resilient in the aftermath of “Liberation Day”, with SK Hynix posting strong 1Q25 results and reiterating their
ability to pass-through tariff costs to end customers, non-chip exports i.e., automotive, machinery, oil and chemicals exports, remain
depressed with US bound exports falling 7% y-o-y in April 2025. Korea was hit with 25% tariffs across the board, apart from 25%
specifically on automobiles, steel and aluminum, although currently at 10% under the 90-day tariff pause. A US-Korea trade deal is under
negotiation, which could bring some reprieve although the uncertainty is still expected to weigh on non-chip exports. The latest GOP bill
has proposed that the AMPC be retained until 2031, while EV consumer credit would be repealed at the end-2025, in line with
market expectations, and a relief for AMPC credit dependent names like LGENSO, although not ideal for EV demand pick-up.
Bond supply likely to continue although valuations have widened for weaker POEs: Korean corporates have issued USD11.4bn of
USD bonds YTD (including USD5.5bn from the Hyundai complex but excluding Korean financials) with net issuance of ~USD7bn. Korea
has USD10.0bn of maturities in 2H25 (including USD2.4bn from HYNMTR) and we expect it to maintain ~10bn of net supply in 2025 as
the overseas capex continues. While bond supply has been well absorbed by the market, Korea IG corporates widened slightly by ~10bp
YTD to 70bp. The space remains well-supported due to investors’ risk aversion and preference for safe regions (with Korea as a Aa2/AA
rated country). Korea IG has underperformed China IG (which is flat YTD) and is in-line with HK IG (which has widened ~10bp YTD).
Stabilized onshore credit environment: The 3-year onshore AAA-AA spread tightened ~15bp /~10bp since January 2024 / 2025 and
remains stable at ~40-50bp in 1H25. The expected terminal rate at 2.0% and a currency swap cost of ~1.9% imply lower onshore funding
cost. Yet, we continue to see overseas capex-related incentives for Korean corporates to issue in the USD bond market.
Bond views:
• Neutral on Korean SOEs: Across Korean SOEs, spreads are only ~10-20bp wider YTD, after spiking up to ~30bp wider in early
April in line with rest of Korea space. We expect the SOE complex to remain rangebound, with spreads of ~15-25bp between
stronger SOEs like KORGAS 2027 at Z+80bp / KORWAT 2027 at Z+70bp and weaker SOEs like KOMRMR 2027 at Z+97bp.
• Neutral on A- rated Korean POEs like KTG / KOREAT with strong fundamentals and domestic focus, which trade at tight levels
on par with SOEs i.e., KTGC 2028 at Z+100bp / KOREAT 2028 at Z+103bp.
• Neutral on SKM 2027 which has widened to Z+100bp after the recent negative news on customer data hacking which affected
25m subscribers. Korea’s privacy regulator has signaled substantial fines over KRW6.8bn fined to LG U+ in 2023. For reference,
30
SKT’s FY24 revenues / operating profit were KRW18bn/KRW2bn.
Trading Strategy: Asian IG Corporates
Korean IG Corporates (Cont.)
Sector
Views and Recommendations
•
Korea
(Underweight)
Bond views:
• Neutral on the Hyundai complex, like the on-the-run HYNMTR 2030 at Z+153bp / 5.29% or KIAMTR 2027 at Z+107bp/4.9%:
While directly exposed to 25% US automotive tariffs (24% of their 1Q25 sales volumes were to the US), which could lower
EBITDA margin to high-single digits from the current ~11%, Hyundai has been proactive in shifting production to the US, through
Hyundai Motor Group Metaplant in Georgia, and even for their upstream supplier through Hyundai Steel project in Louisiana.
• Neutral on the HYUELE curve, including HYUELE 2027 (Z+110bp mid) and HYUELE 2029 (Z+138bp mid), which we view as
fair. SK Hynix reported solid results with 1Q25 revenue of KRW17.6trn (+42% y-o-y, -11% q-o-q, vs the market estimate of
KRW17.2trn) and EBITDA of KRW10.8trn (+73% y-o-y, -4% q-o-q). Management expects demand from AI servers to sustain and
has maintained their HBM sales guidance of +100% y-o-y in FY25. This momentum is expected without any major changes in
capex planning when compared to Korean POE peers, who have reported weaker results (POSCO) or redirected capex (Hyundai
Motors). We continue to view SK Hynix as one of the stronger Korean POEs that can overcome tariff volatility as a leading global
DRAM supplier (36% market share), having surpassed Samsung’s 34% share in 1Q25. However, any rating upgrade from the
current Baa2/BBB/BBB rating requires SK Hynix to be in net cash territory, which we view as unlikely in FY25.
• We maintain our Neutral view on the PKX / POHANG curve, including the recently issued PKX 2030 at Z+152bp and POHANG
2028 at Z+127bp post their 1Q25 results, with valuations reflecting the negative outlook on POSCO’s earnings/credit trend.
Reported soft results for 1Q25, with consolidated revenues of KRW17.4trn (-2% q-o-q) although revenues were lower partly due
to ongoing refurbishments at POSCO Steel. 1Q25 EBITDA was KRW1.6trn (+43% q-o-q), with the sequential EBITDA increase
mainly from very weak results of 4Q24. Capacity utilization lowered to 88% (-3.4pp q-o-q) with production/sales volumes down 45% q-o-q. Reported gross debt was KRW27.2trn (+5% q-o-q) with reported cash at KRW15.5trn (+2% q-o-q), and consolidated
gross/net leverage ticking higher to 4.0x (+0.3x q-o-q) / 1.7x (+0.2x q-o-q). S&P placed POSCO Holdings/POSCO’s A- rating on
Negative outlook post net leverage trigger of 1.5x breached whereas Moody’s adjusted their downgrade triggers slightly higher to
3.5x-4.0x gross / 2.0x net leverage, while affirming POSCO’s Baa1 rating with Stable Outlook. Overall, we see the credit metrics
as weakened post 1Q25 results with negative rating risks to persist.
• Switch from LGCHM 2029 (YTW: 5.3%, Z+158bp) to LGENSO 2029 (YTW: 5.5%, Z+172bp), and from LGCHM 2031 (YTW:
5.5%, Z+163bp) to LGENSO 2035 (YTW: 6.3%, Z+231bp). We believe LGENSO’s fundamental/regulatory risks are largely
priced in, with LGENSO 2035 at ~6.3% levels attractive for a Baa2/BBB- rated Korean POE. Preliminary 1Q25 results show
some improvement after the heavy losses in 4Q24, with modest revenue growth to KRW6.3trn (+2% y-o-y, -3% q-o-q). Operating
profit (including AMPC tax credit of KRW458bn) is at KRW375bn (vs operating loss of KRW226bn in 4Q24, +138% y-o-y), with
AMPC tax credits remaining intact so far. Considering 1Q25 EBITDA of KRW1.2trn, capex of KRW3trn and nominal working
capital / cash interest flows, indicated 1Q25 negative FCF of KRW1.8trn. LGENSO has guided ~20-30% y-o-y lower capex for
FY25 (versus KRW13trn in FY24), having pulled out of an Indonesian project, while expecting a 10% drop in EV demand in the
US amidst trade policy change.
31
Trading Strategy: Asian IG Corporates
Indian IG Corporates
Sector
Views and Recommendations
•
•
•
India (Neutral)
Growth to be dampened but relatively resilient economy in the medium-term: Our economists now expect GDP growth of 5.8% in
FY26 (versus +6.2% in FY25, +6.8% predicted at the beginning of 2025 and RBI’s forecast of +6.5%), after considering muted
consumption and tariff headwinds to private capex spending. With the RBI moving to an accommodative stance, they expect 100bp of
additional rate cuts for a 5.00% terminal rate by end FY26. Headline inflation expected to average out to 3.9% in FY26 from 4.6% in
FY25. USD/INR is forecasted at 83.8 at end-CY25 from 85.6 at end-CY24. Fiscal deficit (% of GDP) should narrow sequentially to 4.4%
in FY26 from 4.8% in FY25 and 5.6% in FY24, with the Union Budget supporting consumption more than spending.
Negative net supply in 1H25 at ~USD2bn, and we now pencil in ~USD0.5bn of negative net supply for Indian IG corporates for
2H25: In 1H25, the Indian IG corporate space only had USD316m issuance from VARNSI. Looking forward, we expect gross supply of
USD3bn for 2H25, which will likely be driven by refinancing from BHARTI and RILIN.
Bond views:
• Small Overweight JSWINI 2029 (PX: 96.3,YTW: 6.1%). Currently rated Ba1 (Stb) / BB+ (Pos) by Moody’s / Fitch, JSW Infra is
well within the upgrade triggers of 3.5x gross leverage (FY25: 2.2x, FY24: 2.4x, FY23: 2.8x). From Fitch, we gather that the
capex pipeline of ~INR40-50bn each year that is likely until FY27 is a hurdle in the upgrade process countered by equity raising
plans in FY26 (as required by SEBI regulation for promoter stake below 75% within three years of listing). Note that Fitch is
required to act on their Positive Outlook by 3Q25, which as per current guidance of equity raise / capex, could lead to a
positive rating action. Moody’s also considers FFO/Debt, which they expect in the range of 18-22% in FY25-FY27 versus their
upgrade trigger of 25% (although FY25:38%, FY24: 34%, FY23: 29%). Furthermore, the FY26 potential equity raise to reach 25%
free float using current share price would bring cash inflows of ~INR68bn which will improve credit metrics.
• Neutral on Indian SOEs including ONGCIN / OILIN / BPCLIN / HPCLIN / NTPCIN at ~Z+120bp / 5.0%, with zero USD bond
supply in these names since 2020. Neutral on A- rated HCLTIN 2026 / WPROIN 2026 at Z+77-88bp/4.9-5.0% which can weather
near-term tariff noise through strong deal pipeline and solid financial position and protect their ~15-18% EBIT margins.
• Switch from the relatively tight TATAIN 2028 (PX: 100.50, YTM: 5.2%, Z+151bp mid) into JLR-issued TTMTIN 2028 (PX:
99.72, YTW: 6.0%, Z+224bp mid) and TTMTIN 2029 (PX: 98.19, YTW: 6.0%, Z+226bp mid), after the encouraging news on the
US-UK and India-UK trade deals with lower tariffs expected for the automotive sector. Based on the FY25 performance, JLR and
TTMT have both met Moody’s upgrade criteria of net cash balance / positive FCF generation, with Moody’s having their Ba1
rating on Positive outlook since August 2024. Whereas TSL reported mixed 4QFY25 results with consolidated revenues of
INR562bn (-4% y-o-y, +5% q-o-q). TSL’s Indian steel EBITDA per ton dropped sequentially to INR13k/t (-11% q-o-q) in 4QFY25
despite a marginal increase in realization of ~INR1k/ton. Meanwhile, TSL’s ratings have been withdrawn by Fitch in May, after
affirming at BBB- with Negative outlook, for commercial reasons.
32
Trading Strategy: Asian IG Corporates
Indian IG Corporates (Cont.)
Sector
Views and Recommendations
•
India (Neutral)
Bond views:
• Neutral on BHARTI with stable credit metrics / revenue trend. While we expect a stand-alone rating upgrade from both Moody’s /
S&P to Bharti’s Baa3 / BBB- ratings after decent results in the last couple of quarters with India mobile ARPU of INR245 (versus
competitor Jio ARPU at INR206), we are Neutral on BHARTI PNC26 (PX: 98.48 YTC: 6.0% mid, perp-to-bullet premium of
~86bp) and senior bullet BHARTI 2031 (YTW: 5.2%, Z+133bp mid) considering rich valuations.
• Neutral on RILIN although longer dated RILIN 2052 (Z+213bp mid) look slightly cheap at current levels. The consistent strong
performance from growth-oriented consumer segments is expected to offset the weakness in oil-related segments, having posted
solid 4QFY25 results. We remain Neutral on RILIN 2032 (Z+156bp mid) which has retraced back to its one-year average levels.
• Neutral on the recently issued VARNSI 2034 trading at Z+212bp/ 6.0%, which we view as fair at ~25-30bp wider than similarly
BBB- rated SUMDIG 2031 at Z+212bp, considering the former is a single-asset concentrated and longer-dated, while the latter is
a large telecom infrastructure business, albeit with higher leverage ratios.
• While credit metrics have weakened as Ultratech pushes ahead with inorganic growth to meet their FY27 domestic capacity
target of ~210mtpa, we believe the concurrent improvement in capacity / sales volumes should support the balance sheet in
FY26 and keep leverage within rating downgrade triggers of 2.5x / 3.0x from Fitch / Moody’s. We remain Neutral on UTCMIN
2031 (Z+160bp mid) on fair valuations, vs Indian IG peers like BHARTI 2031 (Z+133bp mid) and SUMDIG 2031 (Z+174bp mid).
• Neutral on MSSIN 2029 at Z+176bp: SAMIL reported decent 3QFY25 results with revenues of INR277bn (+8% y-o-y, -1% q-o-q)
and EBITDA of INR27bn (+16% y-o-y, +8% q-o-q), which led to improving credit metrics with gross/net leverage of 1.7x (-0.6x qo-q) / 1.1x (-0.1x q-o-q). However, Fitch lowered their outlook from Positive to Stable on its BB+ rating in May, considering the
tariff-related uncertainty for auto-part manufacturers (20% of SAMIL’s revenues are from the US), although management has
guided ability to pass through costs, while Moody’s has rated SAMIL at Baa3 (Stable).
33
Trading Strategy: Asian IG Corporates
Australian IG Corporates
Sector
Views and Recommendations
•
•
•
Australia
(Neutral)
•
•
•
•
•
Australian IG corporates’ USD bond gross supply totaled ~USD19bn in 2025 YTD with all coming from the commodities sector. Meanwhile,
Australian domestic corporates’ AUD bond gross supply totaled ~AUD9bn, of which ~59% came from telecom, power and utilities, ~19% from
transportation infrastructure, ~17% from property/REITs and the balance from the consumer segment. Selected bond views are as follows:
Overweight PONEIV 2031 at Z+281bp/6.7%: Current spread levels look wide considering PON is on track of being upgraded to BBB from BBBby S&P/Fitch. In CY24, PON reported higher revenues/EBITDA of AUD220m (+21% y-o-y)/AUD140m (+33% y-o-y), helped by higher pricing from
coal trade, with gross/net leverage excluding shareholder loan improving to 6.2x/5.9x in FY24 from 8.3x/8.0x in FY23 and net debt lowering
slightly to AUD827m (-2% y-o-y).
Overweight AUD PNHAU 7.75% 2054c29 at ASW+448bp/YTC of 8.1%/98.5c: PN is looking to sell the St Marys terminal to lower its imminent
fallen angel risk, given its persistent weak business performance with its credit metrics breaching the rating downgrade trigger, i.e., net leverage /
FFO-to-net debt at 6.0x/10% in 1HFY25 (or pro-forma 5.5x/11% post the AUD sub hybrid issuance) vs. the downgrade triggers – S&P’s FFO/debt
at 15% and Fitch’s net leverage at 4.5x. St Marys terminal is located in Greater Western Sydney with an industrial land area of ~100k sqm where
the development cost was ~AUD40m, as mentioned by AFR. PN on 15th May exchanged contracts to sell the St Marys terminal to a JV entity of
PGIM Real Estate and Cadence Property Group for ~AUD145m with an expected settlement date on 30th June, subject to FIRB’s approval.
Meanwhile, the remaining unsold land plots of ~7 hectares are targeted to complete by FY26. The AUD PNHAU 2029 at ASW+223bp has priced
in some fallen angel risk, and AUD PNHAU sub hybrids offer a decent sub debt/senior bullet premium/multiple of ~210-220bp/2.0x vs. the other
AUD sub hybrids at ~70-80bp/1.5-1.6x.
Overweight CIMAU 7% 2034 at Z+265bp/6.1%: While CIMAU’s credit metrics breached both S&P’s and Moody’s downgrade triggers, the recent
rating report updates in April 2025 affirmed the current BBB-/Baa3 ratings with stable outlooks, which reflects a potential negative rating outlook is
unlikely in the near-term. The intermediate listed holdco Hochtief’s recent 1Q25 operating performance indicates CIMIC’s 1Q25 EBITDA delivered
at ~AUD529m (+1.0x y-o-y) with order book at AUD25.3bn (2% q-o-q). FY25 operational PBT guided at AUD800-850m (+7-13% y-o-y).
Small Overweight NCIAU 2027 at Z+165bp/5.4% and NCIAU 2031 at Z+221bp/6.0%: Solid BBB+/BBB coal port operator with limited concerns
on refinancing risk. Gross/net leverage improved further to 4.1x/3.6x in 1HFY25 from 4.2x/3.8x in 2HFY24, with net debt lowering to AUD2.7bn (5% h-o-h). FCF generation in 1HFY25 was AUD289m excluding AUD66m investments in deposits.
Small Overweight NBNAUS 2031-2032 at Z+113-145bp/5.0-5.4%: Offers good risk-reward as a AA rated credit compared with other Asian telco
names such as BBB rated AXIATA 2030 at Z+119bp/5.0% and A rated STSP 2030 at Z+98bp/4.7%. In terms of the upcoming debt maturities at
end-April 2025, AUD2.2bn due in FY26 (ended June 2026) and AUD3.0bn due in FY27 vs. undrawn revolvers of AUD7.9bn.
Neutral on STOAU bonds (STOAU 2033 at Z+233bp/6.3%) and WDSAU bonds (WDSAU 2035 at Z+223bp/6.2%): Fairly valued compared with
DM peers such as BBB+ CNQCN / BBB DVN & CTRA / BBB- OXY. While WDSAU is rated at BBB+/Negative by S&P, its bonds are trading like a
BBB credit. Looking forward, WDSAU is looking to sell ~20-30% stake in Louisiana LNG HoldCo to maintain its BBB+ rating, where HoldCo owns
60% stake in InfraCo (the remaining 40% stake sold to Stonepeak which provides ~USD5.7bn funding for the total project capex of ~USD17.5bn).
Neutral on SCGAU’s AUD/USD senior bullets at ASW+132bp/Z+70-122bp and sub hybrids with USD tranche at YTC of 5.70% and AUD tranches
at ASW+200-215bp/YTC of 5.5-6.0%: Stable operating metrics across occupancy, customer visitations and re-leasing spreads. Sub-hybrids-tosenior-bullets spread pick-up at 75bp/1.6x (on USD tranches) and 50-70bp/1.4-1.5x look about fair.
34
Trading Strategy: Asian IG Corporates
Other Asian IG Corporates
Sector
Views and Recommendations
•
•
Rest of
Asian IG
Malaysia: Neutral on GENTMK 2027 at Z+177bp/5.6% and GENMMK 2031 at Z+263bp/6.5%: The recent acquisition of the remaining 51% stake
in Genting Empire Resorts Ltd (GERL) by GENM from the Lim family entity Kien Huat is credit negative for the Genting group given the increased
concern on corporate governance and GERL remains in a cash burning status with high debt leverage, even though the cash acquisition amount
is small at ~USD41m. Post the acquisition, GENM’s gross/net leverage will deteriorate to 5.2x/4.0x based on FY24’s 4.6x/3.4x.
➢ Awaiting better entry levels for RWLVCA bonds including RWLVCA 2031 at 9.3%/79.3c: While the settlement amount (of USD10.5m) with
the NGCB in relation to illegal bookmaking in March 2025 is better than our expectation, earnings generation was subdued with EBITDA of
USD10m in 1Q25 and USD1m in 4Q24 vs. ~USD40-50m per quarter in the past. This is falling behind our prior FY25 EBITDA forecast of
~USD100-130m, when it needs to pay annual interest expense of ~USD150m, maintenance capex of ~USD50m and loan amortization of
~USD35m. The upcoming 2Q25 performance remains to be seen whether the gaming volume can show improvements post the settlement
with NGCB and the normalization of table game win rate. Liquidity position is considered adequate with RWLV’s unrestricted cash at
USD131m at end-2024, besides undrawn loan facilities of USD100m and USD83m undrawn Genting loan. The equity contribution of USD65m
and related party loan of USD5m provided by Genting showed the parental support to RWLV remains intact. That said, we look for a lower
entry of 10%+ to buffer RWLV’s weak technicals under the current market condition, i.e., RWLVCA bonds are not included in JACI index
and relatively less US investors involved in RWLVCA vs. RWNYNY. We also do not see value in RWNYNY 2029 at 6.9%/101.1c.
Thailand: Fundamentals Pecking Order: PTTEPT >= PTTTB > TOPTB >= PTTGC, while Thai sovereign ratings are at the risk of negative
outlooks by S&P and Fitch, besides Moody’s current negative outlook on the sovereign.
➢ Switch from PTTEPT 2042/2059 at Z+210-218bp/6.3% to PETMK 2055 at Z+196bp/6.1%: Moody’s has revised Thailand’s rating outlook to
negative from stable on its Baa1 rating, and our economists expect a likely downgrade in the next 12 months given the deteriorations in fiscal
position and economic growth. Meanwhile, our economists also see negative outlook risks from S&P/Fitch on Thailand’s BBB+ rating. PETMK
is rated A3/A- by Moody’s/S&P with stable outlooks. Petronas’ FY24 revenues / EBITDA were MYR305bn (flat y-o-y) / MYR129bn (-6% y-o-y),
a modest drop given the oil price volatility, while being net cash positive at MYR78bn (FY23: MYR97bn). Dividends to government declined to
MYR32bn (-20% y-o-y) while capex to expand refining capacity (Pengerang Integrated Complex) and green projects (Kasawari CCS) rose to
MYR52bn (+8% y-o-y). A recent risk for Petronas emerged in February 2024 when the state government of Sarawak appointed Petros as the
state’s sole gas aggregator. In January 2025, PM Anwar declared that Petronas retains national authority over oil and gas while Petros takes
control of gas distribution in Sarawak (except LNG, which remains with Petronas), wherein PDA 1974 remains the overarching framework for
oil and gas industry in Malaysia. This dispute was formally resolved, with Petros-Petronas signing a joint declaration on 21st May 2025.
➢ TOPTB’s lower cash bonds TOPTB 2049 at 7.0%/Z+294bp/59c and TOPTB 2050 at 7.1%/Z+299bp/61c look interesting, we have a higher
preference for TOPTB over PTTGC considering better refining operating environment vs. petchem industry, despite the overhang on TOPTB’s
rating and the CFP. In the near-term, we see potential positive catalysts, e.g., obtaining Fitch’s IG rating, potential partial stake sale in GPSC
and Chandra Asri to the parent PTT. The cost over-run related gross capex for the CFP project is estimated at ~USD2.5bn (of which
~USD0.8bn in FY25 and ~USD1.0bn in FY26) in total, compared with the performance bonds at ~USD0.4bn collected so far, as well as
~USD0.6bn GPSC receivables to be collected in FY29. We believe TOP should be able to “maintain” its IG rating status, by removing the
potential rating downgrade leg (e.g., Moody’s at Baa3/Negative) when needed.
35
Trading Strategy: Asian IG Corporates
Other Asian IG Corporates (Cont.)
Sector
Views and Recommendations
•
Rest of
Asian IG
➢ We do not see value in PTTGC senior bullets including PTTGC 2051 at 7.0%/Z+293bp: This considers already weak debt leverage as a
border line BBB- credit under the persistently weak petrochemical profitability environment, and we see TOPTB’s long-end bonds as having
better risk-reward.
Indonesia:
➢ LLPLCA: LLPL is rated as Baa3/Negative by Moody’s with a 50/50 chance of fallen angel risk, given the track record of operational
underperformance between 2017 and 2024. That said, we are Overweight LLPLCA 6.875% 2039 at 7.2%/98.4c (with WAL of 6.3-year and
average annual amortization of ~5.2, considering the current yield levels have been mostly priced in the fallen angel risk compared with BBBrated MINCAP 2037 at 6.7% (with WAL of 9.6-year). In FY24, LLPL delivered revenues of USD231m (-9% y-o-y) and adjusted EBITDA of
USD74m (-18% y-o-y) due to the scheduled major maintenance from December 2023 to February 2024. Gross/net leverage stood at 8.8x/7.9x
in FY24 vs. 7.7x/6.9x in FY23 predominately due to lower earnings, while gross debt reduced to USD657m (-6% y-o-y) vs. cash at USD69m (9% y-o-y, including restricted cash).
➢ KRKPSC: 1Q25 earnings performance was subdued and weaker than expected, amid the dimmer economic outlook in Indonesia despite the
seasonal headwinds (e.g., Ramadan festive period) during the quarter. PTKP delivered adjusted EBITDA at USD60m in 1Q25 vs. USD81m in
4Q24 and USD51m in 1Q24. Steel EBITDA margin compressed to USD81/t from USD100/t in 4Q24, although higher than USD67/t in 1Q24.
Adjusted gross/net leverage stood at 5.6x/5.5x in 1Q25 vs. 5.5x/5.4x in 4Q24, on the back of total debt including leases at USD1.4bn (+5% qo-q) vs. cash at USD26m (+45% q-o-q). Negative FCF during 1Q25 was driven by working capital usage from inventories and trade payables,
where management “claimed” the usage on trade payables due to shift in raw material sourcing to local (cash-based) from Australia (180-day
payment terms). While management believes this working capital usage from payables can be resolved by local supply chain finance, it
remains to be seen, and this can be considered as off-balance sheet debt. Overall, we see an increase in fallen angel risk (i.e., ~50% chance
currently) with 2Q25 results as the next monitoring event with a potential rating review in July/August 2025. While investors can argue
KRKPSC 2027 at Z+295bp/6.7% and 2029 at Z+313bp/6.9% have priced in the fallen angel risk compared with BB+ credits such as JSTLIN, in
fact we wish it can get downgraded into HY to completely remove the rating overhang. To incorporate a knee-jerk reaction should there be a
rating downgrade and the weaker commodity outlook, we look for an entry at 7%-low-7%.
➢ ICBPIJ: ICBPIJ 2032 at Z+154bp/5.4% looks about fair as a BBB credit with a solid set of credit metrics and resilient business profile. In 1Q25,
ICBP’s gross/net leverage stood at 2.6x/1.0x. The 10s/30s of ICBPIJ on Z-spread at ~85bp looks modestly attractive vs. the 1-year average at
~73bp for ICBPIJ 2052 at Z+239bp/6.6%.
➢ CIKLIS: CIKLIS 2035 at Z+190bp/5.9% looks about fair with valuations underpinned by the smaller size of issuance (USD350m) and the utility
nature credit profile, as well as low net leverage (0.4x) and track record of consistent FCF generation.
➢ TBIGIJ: Tight valuations on TBIGIJ 2026-2027 at Z+129-168bp/5.5-5.6% but shorter dated bonds. On 2nd May, TBIG filed an announcement
about a potential bond issuance up to USD900m at a maximum coupon of 8% within 12 months, should it obtain shareholders’ approval in a
general meeting on 10th June.
36
Trading Strategy: Asian HY Corporates
China Property
We remain Overweight for 2H25 after turning positive since our 2024 Asia Credit Outlook. We expect a bumpy uptrend for the sector, similar
to 2024, with the physical market remaining weak but with less credit events. Thus, we view the market sentiment will still be highly
dependent on policy tone but should remain on an uptrend overall. Although we still did not see an effective package of property easing rolled
out, we see that the market has started to believe that continuous policy support should stabilize the sector. Moreover, after waves of defaults, we
take comfort on the remaining surviving property names, which are relatively high quality and offer decent yield pickup due to the bearish sector
view. Fundamentals still face challenges with the temporary pick-up in demand in top tier cities quickly fading since mid-March. We believe the
structural problems (i.e. imbalanced supply and demand in lower-tier cities) will remain, and the insufficient new project launches will also limit the
presales recovery. We continue to see bifurcation with the solid SOE developers taking more advantage on funding, and we retain our preference
to stay in high-quality SOE developers while, for POE names, we would need stringent selection based on fundamentals and price levels.
Favorable policy, weak but stabilized fundamentals, less volatility.
•
•
•
•
•
•
•
Favorable policy tone with focus on home delivery and reducing
inventory.
Fundamentals saw some stabilization since last October, but presales will
remain challenged.
Financing channels for developers likely to remain tight at the group level,
but project level financing has been improving with the “white list”
program.
Fragile market confidence is unlikely to be restored easily but is gradually
improving with less credit event.
Low valuations for bonds, and most weak developers have already
defaulted.
Volatility should be lower after the resolve of Vanke, with the remaining
surviving names are relatively more stable.
Overweight on solid SOE developers and selected POEs.
37
Trading Strategy: Asian HY Corporates
Policy: After the wave of stimulus policies since 24th September 2024 for the overall economy including property, the Politburo meeting changed
the high-level policy tone to “prevent the property sector from further decline”, and the March NPC and the 7th May 2025 policy briefing continued
the supportive tone. The March NPC guided to roll out city-tailored easing measures and to ramp up urban village renovations while tightening the
reins on new land supply and tackling house inventory. While the NPC did not mention specific program size for the purchase of unsold inventories,
we saw an increase in local government special bond (LGSB) quota (increased RMB0.4trn y-o-y to RMB4.4trn), and saw some provinces already
started to issue special government bonds on land acquisition to repurchase land. The May policy briefing also emphasized the development of
tailored financing frameworks for a new real estate model. Bloomberg recently reported that China may shift to sell “completed properties” only from
a presales model. While we believe it will take time to turn the property sector around, we expect regulators to follow up with more policies if current
ones prove to be insufficient.
• PBOC: Delivered a 50bp RRR cut, 10bp policy rate cut, 10bp LPR cut, 25bp PSL cut, and 25bp mortgage loan rates cut through the housing
provident fund. Our economists expect another 50bp RRR cut and a 15bp policy rate cut in 4Q25.
• Local Government: Can tap LGSBs to fund land and inventory purchases and have the discretion over inventory buyouts. Except for key
areas in Beijing, Shanghai, Shenzhen, and some cities in Hainan, all other city-level purchase restrictions have been removed. Lowered the
city-level downpayment ratios and minimum mortgage rates, including those of the Tier-1 cities.
•
Land/inventory purchase picked up in 2Q25 with >170 cities announcing repurchase plans totaling RMB173bn in April, and total announced
repurchase plans amounted to RMB392bn, via issuance of local government special bonds. 74% of the announced plans are in Tier-3/4
cities while 70% are purchasing from LGFVs (SOEs 12%, POEs 17%). However, note that it will take time for the announced plans to
materialize, and most of the repurchase plans announced so far are still focused on primary land rather than existing inventory.
• Escrow Account Supervision remains very tight.
• We view the move on curbing the presales model as reasonable for the longer-term as it is not sustainable for the government to continue to be
the last resort for home delivery. However, Bloomberg reported that the proposal on the new model will only apply to land parcels sold after the
changes. Thus, we do not see material liquidity pressure on existing projects caused by the shifting of models if it becomes effective, but
developers will be more cautious on land acquisitions due to the longer cash conversion cycle on new projects.
38
Trading Strategy: Asian HY Corporates
Financing: Funding channels remain tight, but project level financing improved with the “white list” program.
• Bank loans: In January 2024, the Ministry of Housing and the National Financial Regulation Agency announced the “municipal property
financing coordination scheme”, which is essentially an official version of the “white list” program, to secure normal financing at the project
level. The scale of the “white list” program was enlarged at the project level and includes many distressed developers. As of end-April,
RMB6.7trn was approved (up from RMB2.2trn in October 2024).
•
PBOC announced to extend the IP loan easing policy to end-2026 (from end-2024), allowing high quality developers to use IP operating
loans to repay other existing loans and bonds, and increased the LTV cap to 70% from 50%. We have seen names with solid investment
properties (mainly shopping malls, i.e. LNGFOR/FUTLAN) leveraging the IP operating loans YTD.
• Bond market: Both onshore and offshore bond markets remain tight but have seen small improvements. Onshore for solid SOE names is
normal but POE names still need to issue under the CBICL-guaranteed (China Bond Insurance Corp) structure, which requires stringent
selection of pledged assets. Greentown became the first one that restarted the USD bond market with a new issuance (first issued USD300m
and tapped another USD200m) plus tender in 2025 and we see likelihood for smaller developers to follow if sentiment remains supportive.
39
Trading Strategy: Asian HY Corporates
Physical Market: Presales started to stabilize after the policy easing, especially for Tier-1 cities, but sentiment has faded since mid-March.
•
Presales remained weak on faded sentiment but stabilized, partly due to limited new primary supply. According to CRIC, April top 100
developers’ presales were down 8.7% y-o-y. 4M25 accumulated presales declined 6.7% y-o-y, ~80% lower than the 2021 peak level.
•
•
Housing prices dropped significantly, with secondary house prices down >25% from the 2021 highs, but have seen some recovery since last
September’s policies, especially for Tier-1 cities.
•
•
Tier-1 cities outperformed with 3M25 presales +22% y-o-y. Lower-tier cities remain challenging given imbalanced supply/demand plus
reduction in personal wealth over the previous years.
Land market saw some recovery although still at low levels. Top 100 developers spent RMB428.5bn in land acquisition in 4M25, +41.5% y-o-y,
although ~60% down from the 2021 peak. However, we see further bifurcation as active players were mainly top tier SOEs and focused on tier-1
and selected tier-2 cities.
•
Top 10 developers represented 69% of total land acquisition amount for top 100 developers, indicating further industry consolidation.
•
Top 100 developers replenished 30% of presales amount in 4M25, improved from 13% at end-2024, led by top developers (top 10
replenished 45% of their presales).
Home completion growth remained in negative territory and dropped again in April 2025 to -28% after a short-lived recovery since last October.
40
Trading Strategy: Asian HY Corporates
Fundamentals: Developers continue to exhibit weak operations with relatively tight liquidity – weak presales, high supervision on presales escrow
accounts, shrinking funding channels, slow asset disposals, and more assets pledged to other stakeholders. With presales remaining weak for a long time,
financial results were likewise weak, even for SOEs, with lower margin and tighter liquidity.
• With the prolonged downturn of the sector, we saw developers delivering lower profit margin and taking provision for inventories (non-cash), both for
SOEs and POEs, which led to volatility in P&L. Furthermore, due to the significant drop in presales, we saw decline in contracted liabilities and thus saw
a declining trend in revenue recognition.
• With the help of the easing on IP loans, we have seen some developers obtaining extra liquidity by pledging their commercial assets, but the asset
selection is stringent. Developers with higher recurring income will also see more stability in a prolonged weak residential sales environment.
• It is very difficult to derive confidence from developers’ financials (a lot of “cash” on balance sheet is likely restricted) and financial institutions will focus
more on shareholding structure. Therefore, we expect SOE developers to take more market share, while weak names will shrink materially.
▪ Prefer solid SOE names with >30% SOE shareholding as the largest shareholder, or names with strong business synergy with an SOE parent (i.e.
YUEXIU with Guangzhou Metro).
▪ Mixed ownership developers – With the recent development of VNKRLE, we believe support will remain to stabilize the property market.
Positioning: We believe the market has priced in a prolonged fundamental downturn, and thus we still see upside if policy/fundamentals deliver any
positive surprise. With the resolution of near-term liquidity concerns on Vanke, we expect less volatility in the property sector in the near-term although
physical market improvement might still take time. We believe the surviving names offer decent carry and see potential upside if some of the POE names
manage to refinance in the bond market, depending on market sentiment. Due to lack of fundamental improvement, we are Overweight on SOEs
(happy to buy-on-dip) while staying opportunistic on the surviving high quality POEs and see limited interest in distressed names.
• Overweight on SOE developers: We believe SOE developers will be the key players with the ongoing industry consolidation. Solid SOE developers
will continue to enjoy cheap funding channels onshore, remain active in the land market, and will be the key beneficiaries of any policy easing and
enjoy supportive bond technicals given net redemption on USD bonds due to high USD funding costs. Therefore, we see current valuations on IG SOE
developers as relatively cheap compared to other China SOE peers and recommend to buy-on-dip if they sell off on the back of sectoral weakness.
▪
Overweight solid IG SOE developers including CHIOLI 2028-2034 at Z+146-179bp, CRHZCH 2029 at Z+152bp, offering ~15-20bp of premium
even compared to high beta central SOEs i.e. HAOHUA.
▪
We are Overweight YUEXIU 2026-2031 at 5.5-6.5% (Z+130-272bp) and view it as a good buy-on-dip candidate on any sectoral retracement
although current valuations of 5.5-6.5% look fair as a decent carry. We like its decent business operations and strong shareholding with onshore
bonds directly guaranteed by Yuexiu Group (interest rate <2.8%). This name is one of the few SOEs that are aggressively taking up market share
in a market downturn and delivered +37% y-o-y in 4M25 presales (as compared to -27% y-o-y peer average).
41
Trading Strategy: Asian HY Corporates
We are Neutral on YXREIT 2026 at 6.1%, indicating a ~50bp spread differential versus YUEXIU, but view it as a decent carry overall. While liquidity
remains weak with cash only covering 0.31x of short-term debt, most of its loans are bank loans that can likely be rolled over, especially amid relatively
favorable onshore bank financing for IP loans. We expect stable operations and credit its strong relationship with parent YUEXIU.
▪
Overweight CHJMAO 2025-2029 at 6.5-7.3% and CHJMAO 6.0% perp at 99.5 cash price (up another 2 points YTD, 6.7% YTC, 10.3% YTP). We see
improvement in FY24 results with less provision and more active land acquisition. The company spent RMB20.2bn attributable for 2.02m sqm of land
in FY24 (mainly bought in 2H24) and RMB18.9bn in 2M25, and 69% of the newly acquired land were in Beijing and Shanghai. While we believe the
cross-default clause might be debatable from a legal perspective if things turn south, we still view the linkage between CHJMAO and Sinochem as
strong. Liquidity remains manageable with unrestricted cash covering 1.4x of short-term debt and the company’s debt structure has more towards
onshore with offshore debt reducing 4pp y-o-y to 25% of total debt at end-2024. We also like the CHJMAO 6.0% c2026 perp given its good track
record and its intention to gradually retire the perp structure.
▪
Overweight GRNCH 2028 at 7.7% as a good carry, 40bp tightening since issuance. The company successfully restarted the offshore bond funding
channel by issuing USD500m of new 3-year bonds (first issued USD300m and tapped another USD200m) while at the same time tendering the 2025
bonds at par, the first new issuance for China property names since 2021. Greentown gained market share quickly with strong presales performance
and is now the #2 largest developer in term of presales in 4M25 (from #7 back in 2021). We like GRNCH’s solid SOE background as a consolidated
subsidiary of CCCG with strong linkage with its parent. The company shares credit line within the CCCG group onshore, and CCCG provided letter of
comfort for its offshore loans. Onshore bond channels remain healthy with total of RMB3bn issuances of 3-year MTNs at 4.20-4.37% coupon YTD, and
the company has been actively repurchasing onshore bonds in the secondary market (repurchased RMB2.1bn in total，~RMB0.6bn YTD). Moreover,
we view the linkage between Greentown and CCCG should be even stronger after the other listed property subsidiary, i.e. CCCG Real Estate
(000736.SZ), exited the property development business this January and is now only focusing on city operations.
▪
Small Overweight VNKRLE 2027-29 at 73-83 cash price (11.2-12.2% yield). Vanke has the biggest roller coaster performance in the sector YTD and
has redeemed the USD423m 2025 bonds with the help of Shenzhen Metro as what we expected. As discussed previously, we believe the government
will remain the last resort for Vanke besides pushing banks for refinancing, but do not expect it to be a Huarong type of fully takeover case. Besides
the continuous shareholder loan support from Shenzhen Metro (RMB11.9bn in total YTD with no asset pledge needed for the last two rounds), Octus
reported that its parent Shenzhen Metro is considering consolidating the developer’s financials. While we do not expect a significant increase in shares
to avoid a general offer in public (currently owns 27.8%), we still view a consolidation of balance sheet will indicate stronger linkage and will improve
Vanke’s funding channels (like Greentown), if true. Therefore, while we mentioned previously that we might consider taking profit on VNKRLE on the
rally after their repayment of 2025 given no improvement on fundamentals, we see the current risk-reward as still skew towards the upside if Shenzhen
Metro really consolidate Vanke. We believe Vanke will be more like a LGFV type of name that trades on the belief of government support rather than
fundamentals going forward, but we turn Small Overweight from Overweight and will be more opportunistic and more price sensitive after the big rally.
42
Trading Strategy: Asian HY Corporates
• See less volatility in surviving POE developers, but refinancing channels will be highly reliant on sentiment given fundamentals are unlikely to
improve. We take some comfort that most weak developers have already defaulted/exchanged while the remaining names are relatively high quality and
trading at low valuations. Among the POE survivors, we prefer smaller names with clean balance sheets, or developers with more commercial assets as a
last resort for financing. With the lack of supply with decent yield, we see potential new deals (new issuance plus tender) from the surviving POEs if market
sentiment remain supportive, especially after the success case of GRNCH earlier this year.
▪ We see SHUION 2026 / YLLGSP 2026 at 9.1% / 8.0% as decent carry with only one USD bond left. Both have relatively small business scale, decent
commercial assets or offshore portfolio, tight but largely manageable liquidity. We see potential upsides if the company decides to pay up to do friendly
LME in the bond market (i.e. tender plus new issuance) or they may just pay back the only bond with cash flow from operations.
▪ LNGFOR: We do not see much near-term maturity pressure for LNGFOR, and the company’s existing curve enjoy solid technicals especially after the
company repurchased USD274.5m of bonds in open market with the remaining balance of offshore bonds reducing to USD1.3bn. We view the LNGFOR
curve as the new beta for the China property sector and see LNGFOR 2027-2032 at 9.3-9.6% as decent yield considering we are expecting a stabilizing
sentiment. The company benefited from decent shopping mall portfolios with incremental pledge IP operation loans (increased to RMB77.3bn at end2024 from RMB47.4bn at end-2023) helped by favorable policy. The recurring profit recorded at RMB14bn, covering 1.9x of its interest expenses, which
should also helped maintain a sustainable business despite a declining residential sales.
▪ FUTLAN：The company plans to issue RMB1.5-2.0bn of CBICL bonds before July to repay the USD300m FUTLAN 07/2025, while might also look to tap
the USD bond market for the USD300m October bond if the market is supportive. Seazen has RMB19bn of unpledged investment properties and is also
looking to increase the LTV of the old operating loans from 30% to ~50%. In our view, the company has benefited from the favorable IP operating loan
policy and decent growth in recurring income. Rental income increased to RMB6.5bn and income from property management recorded at RMB5.5bn in
FY24, covering 2.0x of interest payment assuming 60% NOI margin. Considering the shrinking market, lack of yield, and improving sentiment in China
property, we see it is possible, and will be beneficial for the company, to restart USD bond issuance, i.e. new issuance plus tender. However, we will
request for higher yield to compensate for the lower-tier city focused malls and high payables in supply chain / the weak residential segment.
• On defaulted/extended names, as we are not excited on their fundamentals as a full recovery of the property sector is unlikely, we see limited upside for
the names. After the proposal of SUNAC restructuring 2.0, we see most of the value of the restructuring bonds end up coming from value after converting to
stock, while stock price depends on policy and the dilution ratio. Thus, although we do not see near-term catalysts for the distressed names, given they are
trading at very low cash prices, they can potentially be a cheap China bet if there is a larger-than-expected liquidity injection into the property sector.
Among the distressed names, we prefer names that have more offshore and commercial assets and cooperative management for on-track restructuring
talks. Names with some SOE ownership (i.e. SINOCE, GRNLGR) also saw some interest.
43
Trading Strategy: Asian HY Corporates
China HY Corporates – Industrial POEs
Views and Recommendations
Sector View
• We turned Neutral from previous Overweight on China HY industrial names after the significant tightening on most of the names. We
expect industrial names to remain well supported despite tight valuations, underpinned by China’s policy stimulus, and considering
there are limited investable candidates from China HY space if investors want to deviate from property risk.
Bond Views
(Neutral)
• Relatively stable carry names:
• Overweight FOSUNI 2025-2028 at 7.1-8.4% as a good carry play. We view the curve as already trading relatively tight but should
remain tight due to favorable China policy and the lack of decent names in China HY. We believe the company has incentive to
tap the bond market again if the curve tightens further to extend its average debt maturity (target >2 years). We like Fosun after
deleveraging over the last two years and take comfort from its large holding portfolio as a liquidity buffer. We expect the group to
maintain stable operations with significantly improving dividend income (RMB6.7bn in FY24 versus RMB5bn in FY23, including
EUR340m from Fidelidade) that covers group level interests (~RMB5bn in FY24), and continue its asset disposals (RMB15.5bn
proceeds in FY24, targeting RMB15bn in FY25) to fund further deleveraging.
• We remain Small Overweight on BTSDF 2028 at 101.8 cash price (8.5% yield), providing decent carry. We expect H&H to
gradually recover from the previous GB transition period on its BNC business and believe its ANC and PNC business should
continue to deliver stable growth. BNC business already saw some improvement in 1Q25 with 25.3% growth in segment sales,
helped by recent policy as well as the full roll-out of the new GB series. The company showed significant improvement in financing
channels. It successfully replaced the old 2026 bonds with USD300m new bond issuance this January, lowering the coupon to
9.125% from 13.5% and extend the tenor to 2028. However, we expect the deleveraging pace to remain slow given the macro
headwinds and high competition. On the other hand, the Australian Tax Office (ATO) lawsuit remains an overhang, amounting to
AUD407m of primary tax payable by BHA (a subsidiary) plus interest and penalty. The company has objected the assessment
and has hired lawyers for potential litigation, expected to take at least two years, and the amount that the company may need to
pay this year could be ~AUD117m maximum as deposit to ATO, according to management. While a net adjusted debt to EBITDA
at 4.0x at end-2024 (3.4x at end-2023) and an EBITDA to interest coverage at 2.1x in FY24 (2.9x in FY23) would put some
pressure on rating, we expect a slight recovery of EBITDA with the help of sales recovery in BNC segment.
• EHICAR: The company delivered weak FY24 results but largely inline with previous company guidance. Fleet size decreased by
a slight 5%q-o-q to 126k in 4Q24 while utilization rate remained low at 61% from 70% in 2023. Financing channels also did not
see much improvement with no updates on the syndicated loan. With a relatively weaker macro environment, we do not expect
much improvement in Ehi’s operations while the shift to operation leasing model remains to be tracked. Thus, while EHICAR
2026-2027 are trading at low cash levels at 67-71, we turn Neutral from previous Tactical Overweight after the ~3 points
rally on the curve, seeing limited downside yet also limited upside. We do not see a clear path for the company to raise cash
to repay the 2026 bonds while a bond exchange (like in March 2024) will require more operational improvements, in our view.
44
Trading Strategy: Asian HY Corporates
China HY Corporates – Industrial POEs (Cont.)
Sector
Views and Recommendations
•
•
Commodities
•
CHIOIL: In terms of holdco cash inflows items for FY25 guidance/our expectation, CCNG’s dividends income at ~RMB350m (HKD375m),
Canadian E&P’s dividends at ~CAD15m (HKD81m), Shandong Shengli’s interest income/dividend at ~RMB88m (HKD94m) and Sino Director’s
shareholder loan repayment at ~RMB10m (HKD11m), i.e. holdco cash inflows of ~HKD560m in total. This compared with annual interest cost
from syndicated loan and USD bond at ~HKD293m and the listco opex at ~HKD20-25m, i.e. ~HKD315m in total. While management has the
ability to pay ~10% coupon to refinance the outstanding USD400m CHIOIL 4.7% 2026 (7.2%/97.4c), in our view, we believe the coupon levels
the company might be willing to pay is ~6%, when management stated in the call that ~7-8% in USD terms (5-6% in RMB terms) vs.
management’s “indicated” potential onshore funding access at ~3% or below in RMB terms. We have assumed the following scenario: USD100m
repayment + USD300m new 5-year USD bond issuance at 6% coupon with required yield level of ~8%, i.e., the fair value of CHIOIL 2026 is ~95c
under this scenario, where the current bond pricing indicates ~55-65% probability assuming the best case that the bonds will be repaid ontime/early at 100c/101.175c.
HONGQI: Neutral on HONGQI 7.05% 1/2028 at 6.5%/101.3c, despite the robust financial performance as seen in 2H24 and lack of quality
alternatives in China industrial space. In 2H24, it reported revenue and reported EBITDA of RMB83bn (+12% h-o-h) and RMB24bn (+15% h-o-h),
respectively, which implied gross/net leverage of 1.6x (-0.2x h-o-h) / 0.6x (-0.2x h-o-h) with gross debt of RMB72bn (+3% h-o-h) vs. cash at
RMB48bn (+20% h-o-h, including restricted cash). That said, from corporate governance perspective, the recent share swap transaction
regarding Hongchuang A-share in acquiring Shandong Hongtuo from Weiqiao Aluminum and Power, where Shandong Hongtuo holds 6.5mtpa
primary aluminum production capacity and 17.5mtpa alumina capacity. The share swap transaction could result in ~5-9% share dilution vs. ~94%
original ultimate stake held by China Hongqiao in these plants.
WESCHI: Regarding the potential LME scenario of USD600m WESCHI 7/2026 at 28.0%/79.1c, our base case assumes (1) ~20% upfront
payment (vs. management’s guided up to 50% upfront), (2) a 3-year new bond issuance with coupon setting at ~8% (referencing the DR Congo
and Uganda project loans at ~SOFR+5%, although those project loans’ tenor at 6-8 years), (3) a higher IRR at ~18-20% than typical ~10-15%
levels, when WESCHI’s operating risks skew towards African countries with average sovereign ratings in the B/CCC categories, i.e. NPV is
estimated ~80-83c. Regarding the source of funding about ~20% upfront principal (or ~USD120m) for the bond LME, it could come from (1)
WCC’s holdco cash at HK offshore entity of ~USD20m (out of its consolidated cash at RMB1.2bn, although cash held at other African
subsidiaries indicated at ~USD20m in Ethiopia, ~USD20m in Mozambique and ~USD10m in DR Congo); (2) cash/profit repatriation such as DR
Congo at ~USD30m, Mozambique at ~USD40-45m (vs. management’s guidance of ~USD60-70m) and Ethiopia attributable at ~USD20m (low
visibility, despite the prior ~USD2m per month repatriation for daily opex purpose); (3) any successful onshore asset sale considered as an
upside, i.e. management outlined that the planned asset sale across Xinjiang, Guizhou and Sichuan with an aggregate book value of ~RMB3bn,
while the Xinjiang asset with estimated gross investments of ~RMB1.6bn (vs. Guizhou and Sichuan) is considered the easier part of asset sale
execution, in our view, but we do not factor this cash proceeds into our base case there is low visibility about the asset sale execution currently.
45
Trading Strategy: Asian HY Corporates
Hong Kong & Singapore NR/HY Corporates
Sector
Views and Recommendations
Hong Kong
• We view NWDEVL’s situation as highly linked to their bank loan progress (refinancing loan and incremental DB loan). The
HKD63.4bn bank loan refinancing was slower than expected with only ~HKD20bn agreed so far according to Debtwire. The
refinancing package essentially covers all unsecured bank loans with a HKD126.3bn value of asset package and added a letter of
support from CTF Enterprises along the negotiations. The company initially aimed to finalize the loan by end-June. On the other
hand, we view the treatment on NWDEVL 6.15% c2025 perp will be highly linked to the incremental HKD15.6bn DB loan pledging
K11 Dockside as a first lien, given the DB loan’s proceeds are for capex and bond refinancing (15-25% of the proceeds for debt
repayment depending on the closing size). While the company has already passed the call notice day to avoid a coupon step-up,
note that the company can call the 6.15% perp anytime after March 2025. For operations, the company's reported EBITDA in
1HFY25 was HKD9.6bn (but only HKD4.5bn on paper taking after taking out NCD) and FCF was -HKD0.2bn after deducting
HKD4.9bn capex, HKD3.9bn net interest payment, and HKD0.9bn perp distribution.
Overall, we view New World will continue to see operational pressure but refinancing all the bank loans will buy them another 1-2
years of time. However, the high step-up perps remain a problem to solve, especially the USD1bn NWDEVL 5.25 perp. We do not
see immediate coupon deferral risk for perps this June, and the first double-digit perp coupon will only be paid in December if the
company does not call the 6.15% perp. We see higher coupon deferral risk in mid-2026 when the company needs to handle the
larger sized 5.25% perp. Thus, we are overall cautious on the curve but view the name might still see a tactical rally if they
finish the bank loan refinance or close the DB loan and use the proceeds for bond repayment.
Singapore
• GLPSP/GLPCHI: We believe the group has manageable liquidity and light bond maturities in the near-term, especially after closing
the Ares deal (USD1.4bn upfront cash and USD300m of Ares shares), and has benefited from the China easing cycle on funding as
well as lack of quality assets. The new bond issuance showed some improvement in funding channels, and we view the group will
look to tap the market if there is investor acceptance, although the deal has missed the expectation of a public bond deal and no
improvement on OC terms. However, deleveraging was slower-than-expected even with continuous asset disposals. At the same
time, the opaque financials and related party transactions remain a concern. With GLPCHI 2026 traded up to 94 cash price (10.5%
in yield) after the repayment of GLPSP 2025, we view the GLPCHI 2026 as a good carry play with a clearer picture of the company
in the near-term. The newly issued GLPSP 2028 are trading at 98 cash price (10.5% yield), and we view the yield should already
reflect the company’s weak fundamentals. GLPSP perps are trading at 13.4-13.7% YTW and we see limited call likelihood unless
they can tap the market with a new perp. Thus, we will remain opportunistic on the perp as we need more bullish market sentiment
or more indication of funding channel improvement to see GLP perps trading up.
• FY24 results were weak but have not yet reflected the Ares deal. While financing cost reduced 15% y-o-y to USD792m, the
company still needs to rely on continuous asset disposals to remain sustainable operation (given underlying EBITDA of
USD718m in FY24 before adjusting for GLP monetized FV gains).
46
Trading Strategy: Asian HY Corporates
Macau Gaming: Fundamental Pecking Order – SANLTD > MGMCHI > WYNMAC > MPEL > = STCITY = SJMHOL
•
The sector-wide debt reduction efforts are underpinned by continued FCF generations, despite the sector’s business recoveries are mostly reflected and the
resumption of dividends, i.e., the aggregate debt of gaming operators (excluding Galaxy) reduced to USD26bn in 1Q25 from the peak of USD33bn in 4Q22, as
well as compared with FY19’s USD20bn.
Entities (USD m)
Bond Ticker
Rating
(Mood'y/S&P/Fitch)
Shareholders
GGR and Market Share in 1Q25
Total GGR in Macau
Mass GGR % Total GGR
Total GGR Market Share
Market Share Gain/Loss vs. FY19
1Q25 Total GGR % of 1Q19 Levels
1Q25 Mass GGR % of 1Q19 Levels
Key Financials in 1Q25
Reported Revenues
Gaming Revenues % Net Revenues
Adj Property EBITDA
% of 1Q19 Levels
Total Debt
Net Debt
Cash
Gross Debt/1Q25 LTM Property EBITDA
Gross Debt/FY19 Property EBITDA
Net Debt/1Q25 LTM Property EBITDA
Net Debt/FY19 Property EBITDA
Debt Maturity and Liquidity Profile in 1Q25
Total Liquidity
- Cash
- Undrawn External Revolvers/Loans
Debt (excluding lease liabilities) maturing in,
Rest of CY25
CY26
CY27
CY28
CY29 and after
Total Debt
Drawn External Loans & Revolvers
Sands China
SANLTD
Baa2 (Stb) / BBB(Stb) / BBB- (Stb)
LVS (72%)
MGM China
Wynn Macau
WYNMAC
MGMCHI
B1 (Stb) / B+ (Stb) / B1 (Pos) / BB- (Stb) /
BB- (Stb)
BB- (Stb)
Wynn Resorts
MGM Resorts (56%),
(71%)
Pansy Ho (22.5%)
Melco Resorts
Finance
MPEL
Ba3 (Stb) / BB- (Stb) /
NR
STCITY / STDCTY
STDCTY: Ba3 (Stb)/ B+ (Stb)/ NR;
STCITY: B1 (Stb) / B+ (Stb)/ NR
Melco Intl. (54%)
Melco Resorts (100%)
Melco Resorts (55%)
SJM Holdings
Melco Resorts
SJMHOL
Ba3 (Stb) / NR /
BB- (Stb)
STDM (62%), Angela
Leong (8%)
N/A
NR/ NR/ NR
Studio City
1,609
90%
22.6%
-1.4pp
68%
86%
1,128
87%
15.8%
+6.3pp
131%
189%
885
86%
12.4%
-2.3pp
60%
113%
971
92%
13.6%
-0.6pp
72%
107%
1,132
80%
15.9%
-0.6pp
80%
115%
796
72%
11.2%
-1.3pp
75%
109%
336
100%
4.7%
+0.8pp
95%
128%
1,709
74%
535
62%
6,975
6,055
920
3.1x
1.8x
2.7x
1.0x
1,027
87%
286
148%
3,027
2,211
816
2.8x
2.7x
2.1x
2.2x
866
83%
252
65%
5,850
4,359
1,491
5.4x
3.6x
4.0x
2.3x
961
93%
123
90%
3,437
3,021
415
6.9x
3.6x
6.1x
0.2x
1,232
85%
341
82%
7,180
5,951
1,229
5.7x
2.8x
4.7x
1.9x
717
88%
202
81%
5,008
4,346
662
7.3x
2.8x
6.3x
1.9x
355
80%
97
101%
2,172
1,940
232
6.2x
4.0x
5.5x
3.1x
5,091
920
4,171
3,294
816
2,478
1,844
1,491
353
901
415
486
3,271
1,229
2,042
2,463
662
1,801
432
232
200
1,625
800
700
1,900
1,950
6,975
-
500
750
750
1,027
3,027
527
1,000
750
2,500
1,600
5,850
1,150
166
929
437
1,904
3,437
1,757
1,222
500
1,108
1,350
3,000
7,180
158
1,000
500
758
850
1,900
5,008
158
222
350
500
1,100
2,172
-
Source: DSEC, DICJ, Company Filings, Bloomberg, Nomura; Notes: (1) Melco Resorts Finance uses Melco Resorts Macau excluding Studio City in Melco Resorts & Entertainment’s filings as a proxy, and Studio City’s revenues is
before incorporating casino agreement in between MLCO and MSC; (2) SJM’s debt maturity schedule is based on our estimation
47
Trading Strategy: Asian HY Corporates
Macau Gaming: Maintain Small Overweight
•
Industry total GGR in April 2025 / 4M25 at 80% / 77% of 2019 levels, with mass gaming tracked at ~110-115% of levels vs. VIP gaming at ~25% levels. Amid
the concern of global economy slowdown, Macau delivered a set of May 2025 Golden Week’s (GW) “golden” performance, i.e., average visitation during the
May GW was ~170k (+41% y-o-y, 107% of 2019 levels), and daily total GGR tracked at ~MOP1.0bn during the 2025 GW vs. ~MOP0.9bn in 2024. Meanwhile,
the industry’s aggregate EBITDA in 1Q25 tracked at ~79% of 2019 levels, broadly in line with ~79-83% of levels in the past few quarters.
•
Our forecast on 2025 total GGR in Macau at ~MOP227bn (flat y-o-y, 78% of 2019 levels) with VIP/mass GGR at ~MOP27bn/MOP200bn (+1%/flat y-o-y,
24%/111% of levels), and 2026 total GGR at ~MOP222bn (-2% y-o-y, 76% of levels) with VIP/mass GGR at ~MOP27bn/MOP195bn (-1%/-3% y-o-y, 24%/108%
of levels) in reflecting the potential headwinds on consumer sentiments arising from global economic uncertainties. That said, we believe the Macau gaming
operators’ satisfactory FCF generations and balance sheet quality, with key visitors from mainland China, should be more resilient than other industries which
are more dependent on global economy.
•
Average yield was unchanged at ~6.5% (excluding SANLTD at ~6.8%) currently, compared with ~6.5% (excluding SANLTD at ~6.8%) at end-December
2024. Although this was still tighter than end-December 2023’s ~7.1% (excluding SANLTD at ~7.6%), it still offers good carry to investors considering the
sector’s stable credit fundamentals. We have cut our 2025 gross supply to ~USD2.7bn (from ~USD3.3bn) vs. full-year redemption at ~USD3.35bn, resulting in a
deeper net negative supply.
•
Bond views:
➢
Overweight SANLTD 2028-2031 at 5.8-6.0%/Z+205-216bp including SANLTD 2031 at 6.0%/Z+216bp: With all hotel rooms and suites (~2.4k keys) at the
recently renovated the Londoner Grand have been available for the May 2025 Golden Week (vs. SANLTD’s ~14% of hotel rooms unavailable in 1Q25 due to
on-going upgrading works primarily at the Londoner), we should see better operating performance from 2Q25, compared with SANLTD’s 1Q25 property
EBITDA at ~62% of 2019 levels vs. the industry average at ~79% of levels. Net leverage stood at 2.7x in 1Q25 vs. 1.0x in FY19, while liquidity position was
solid with cash of USD920m and undrawn revolvers of USD4.2bn, against USD1.6bn debt due in 2025 and USD0.8bn in 2026.
➢
Overweight MPEL 2028-2032 at 7.2-7.7% including MPEL 2032 at 7.7%: The earnings recovery for the Macau excluding Studio City business finally saw
outperformance in 1Q25, and the shareholder loan provided to its HK-listed parent Melco International by the owner Mr. Lawrence Ho also showed the financial
support to remain intact with less financial burden to be shared by Melco Resorts. 1Q25 property EBITDA stood at 81% of 2019 levels. Solid liquidity position at
the MPEL level with 1Q25 cash at USD662m and undrawn revolvers of USD1.8bn, against USD1bn debt due in 2025 and USD500m in 2026.
➢
Overweight STCITY 2029 at 8.3%: Studio City’s 1Q25 property EBITDA stood at 101% of 2019 levels. Liquidity position was adequate with cash of USD232m
(including USD134m sitting at Studio City casino level) and undrawn revolvers of USD200m, against USD222m debt due in 2025 before another USD350m
debt due in 2027. STCITY 2029 offers a larger yield pick-up of ~95bp over MPEL bonds, compared with STCITY 2028 at ~35bp and a fair yield pick-up of ~3040bp.
➢
Small Overweight WYNMAC 2027-2029 at 6.4-6.9% including WYNMAC 2029 at 6.9%: While 1Q25 property EBITDA stood at 65% of 2019 levels which was
below the industry average at 79% of levels, this was due to unfavorable VIP win rate impact during the quarter, i.e. 1Q25 luck-adjusted EBITDA tracked at
81% of 2019 levels. Liquidity position was solid with cash of USD1.5bn and undrawn revolvers of USD353m, against USD1bn debt due in 2026. WYNMAC
offers an attractive yield pick-up of ~90-110bp over WYNNLV/WYNFIN, compared with MGMCHI-MGM at ~10-50bp for the 2027+ tenor.
48
Trading Strategy: Asian HY Corporates
Indian HY Corporates: Downgrade to Neutral from Small Overweight
•
The downgrade of the India HY corporates’ sector recommendation reflect our views that the faster-than-expected recovery for India HY corporate bonds in
general, with the weighted average yield (excluding VEDLN bonds) is tracking at ~7.0% currently, compared with ~6.9% in late November 2024 (at the time
when we had a Small Overweight recommendation). Meanwhile, India has a weaker economic outlook with GDP growth at 5.8% in FY26 compared with
November 2024’s forecast at 6.8% according to our economist, despite the significant de-escalation in Trump’s tariff and India-Pakistan conflict. Therefore, the
sector’s risk-reward looks about fair, although we have a couple of Overweight recommendations on individual names.
•
Renewables: Policy environment remains supportive under India’s long-term aim of achieving 500GW renewables (RE) capacity by 2030. The RE installed
capacity increased to ~220GW at end-March 2025, from ~209GW at end-2024 and ~181GW at end-2023, with the pace of capacity additions growing relatively
slower towards the 2030 target. In terms of RE installed capacity by types, ~48% comes from solar, ~24% from hydro and ~23% from wind and the rest from biofuel. Meanwhile, the RE’s under construction/development projects (excluding large-scale hydro) totaling ~145GW (~54% from solar, ~19% from wind and the
rest from hybrids). RE’s sector weighted average yield stayed at ~7.4% currently compared with ~7.3% in late November 2024, while the yield pick-up over US
BB rated corporates (with YTW of ~6.4%/WAL of 4.9-year) narrowed by ~20bp to ~100bp during the period.
•
Bond views in renewables
➢
Azure Power Global: Overweight AZUPOE 3.575% 2026 RG3 at 7.9%/95.3c. The settlement agreement signed on 11th April between defendants including
APGL and the plaintiffs in a US shareholder class action, with APGL in paying USD23m as the settlement amount, is a constructive message in removing the
overhang involved by former management. We believe AZUPOE 2026 RG3 can be addressed by onshore project debt eventually, with a potential chance
being redeem early, in our view. In 1HFY25, AZUPOE RG3 reported LTM EBITDA of INR4.8bn with net debt of INR26bn, which indicated net leverage of 5.4x.
Receivables days stood at 163 days.
➢
JSW Hydro Energy: Neutral on HBSPIN 4.125% 2031 RG at 6.7%/89.3c with annual coupon carry of ~4.6%. While credit metrics remain solid, the bond
valuations do not look attractive from both coupon carry and yield levels. In FY25, HBSPIN RG reported operational EBITDA of INR8.9bn with net debt of
INR40bn, which indicated net leverage of 3.7x. Receivables days stood at 8 days.
➢
Greenko Energy Holdings: Our fundamental pecking order on GRNKEN complex is: GRNKEN 4.3% 2028 RG4 at 7.3/92.5c > GRNKEN 3.85% 2026 RG1 at
7.1%/97.4c > GRNKEN 7.25% 2028 RG5 at 8.1%/97.6c. We still see high rating downgrade risk on the group GEH’s rating by Moody’s and S&P. On a
consolidated level in 1HFY25, the group reported LTM revenues and adjusted EBITDA of USD630m and USD424m, on the back of operational capacity of
5.5GW (58% wind, 28% solar, 14% hydro). Gross/net leverage stood at 13.9x/11.8x in 1HFY25, on the back of gross debt at USD5.9bn vs. cash (excluding
non-current portion of USD68m) at USD878m. 1HFY25 LTM FCF was a negative of USD871m on the back of USD865m capex. Going forward, GEH’s capex
pipeline remains heavy with total estimated capex of ~USD4bn over FY25-28, mainly come from four PSPs at 7GW including the Pinnapuram PSP at 1.68GW.
Besides the PSPs, GEH completed the acquisition of a 60.1% stake (and increased to a total stake of 94.4%) in 1.5GW run-of-the-river Teesta Hydropower
plant/Sikkim Urja Ltd (SUL), which would add another USD1.3bn debt into GEH, i.e. USD1.0bn debt from SUL’s existing debt and USD0.3bn from PFC/REC
loan extension. While media outlets reported that the founders has downsized a 2-year loan to ~USD600m from ~USD800m to fund Orix’s partial exit by
acquiring ~17.5% stake (lowered from ~20% stake originally) with 14% PIK, we still see uncertainty about the founders’ repayment ability when GIC is also
unable to exit GEH by selling the (partial) stake to external investors.
49
Trading Strategy: Asian HY Corporates
Indian HY Corporates (Cont.):
•
Bond views in renewables
➢
ReNew Energy Global: In terms of fundamentals and RG/holdco structure, as well as underlying collateral, the pecking order will be RPVIN 4.5% 2028 RG4 at
6.8% >= INGPHL 4% 2027 RG1 at 6.6% > RPVIN 5.875% 2027 onshore holdco at 6.8% > RNW 7.95% 2026 offshore holdco at 7.5% > INCLEN 4.5% 2027
offshore holdco at 8.0%. We like the shorter dated RNW 7.95% 2026 offshore holdco which offers the highest annual coupon carry at ~7.9%, compared with
other ReNew bonds’ annual coupon carry at ~4.2-6.0%. We are Overweight RPVIN 4.5% 2028 RG4. 3QFY25 consolidated financials continued to show high
debt leverage amid the capacity expansion phase, i.e., 3QFY25 gross/net leverage stood at 9.9x/8.8x vs. 9.4x/8.3x in FY24 and 8.7x/7.4x in FY23, with
3QFY25 LTM EBITDA of INR74bn, this compared with the group’s long-term net leverage target of ~6x. 3QFY25 LTM FCF was a negative of INR100bn, on the
back of capex of INR121bn, with consolidated operational capacity expanded to 10.8GW from 8.9GW in FY24 and 8.0GW in FY23 vs. the committed portfolio
of ~17.4GW.
➢
Continuum Green Energy: Small Overweight COGREN 9.5% 2027 holdco at 7.4%/102.4c with YTC @ 103.135c in August 2025 at 11.8% and YTC @
102.375c in February 2026 at 9.2%. In April 2025, CGEL received the SEBI approval to raise INR36.5bn through an IPO (of which INR12.5bn from fresh equity
issuance and INR24bn from offer for sale/OFS by promoter CGEHL which could indicate the IPO timeline sometime in late 2QCY25/early 3QCY25. The prior
CGEL’s Just Climate transaction in August 2025 indicated EV/EBITDA at ~18-19x (based on LTM 3QFY25 financials, the rising EBITDA from new capacity
commissioning should lower the indicated EV/EBITDA levels) vs. its peer Acme Solar’s current EV/EBITDA at ~18x. In 3QFY25, CGEL reported consolidated
net leverage of 14x, on the back of gross debt at INR145bn vs. cash at INR17bn and LTM EBITDA of INR11bn, with installed capacity of 2.2GW (+0.4GW q-oq) vs. the targeted commissioned capacity of 2.3GW. We are Small Overweight CGRNEG 7.5% 2033 RG2 at 7.1%/101.75c with annual coupon carry of
~7.3%. CGRNEG RG2’s net leverage stood at 7.4x in 1HFY25, based on LTM operational EBITDA of INR7.5bn vs. net debt of INR55bn. Receivables days
stood at 66 days.
➢
Clean Renewables Power / Hero Future Energies: Neutral on CLRNPW 4.25% 2027 at 6.3%/96.7c with annual coupon carry of ~4.4%. Given the weaker
power generation y-o-y in 1HFY25 due to lower wind speed and irradiance, CLRNPW RG’s 1HFY25 LTM operational EBITDA was lowered to INR3.6bn vs. net
debt at INR27bn, implying net leverage of 7.4x. Receivables days stood at 114 days.
➢
India Cleantech Energy / Acme Solar: Overweight ACMSOL 4.7% 2026 RG at 6.8%/97.7c with annual coupon carry of ~4.8%. Continued to show debt
deleveraging efforts and good receivables collections vs. the average of Indian renewables RG peers, ACMSOL RG’s net leverage reduced to 5.8x in 3QFY25,
on the back of LTM operational EBITDA of INR3.7bn vs. net debt at INR22bn. Receivables days lowered further to 53 days. That said, our base case does not
expect the ACMSOL bonds to be called early in 2025.
➢
SAEL: SAELLT 7.8% 2031 RG at 9.0%/94.5c with annual coupon carry of ~8.2% is an interesting level to us as a potential Overweight candidate. SAELLT
RG1 comprises of a combined capacity of 334MW across solar and waste-to-energy (WTE) projects, of which 243MW from solar and 91MW from WTE. The
projects within the RG are now operational with WTE Jasrasaar of 14.9MW commissioned in January 2025. It is considered the weakest RG bond within the
Indian renewables space, given the short operating history and the sponsor profile, as well as no full cost pass through protection regarding the cost of
purchase in paddy straw as a fuel for its WTE assets. The delay in the first MCS payment on 31 st January (although repaid subsequently on 25th February),
following former CIO Varun Gupta’s departure, reflected the key man risk for SAEL’s capital market operations.
50
Trading Strategy: Asian HY Corporates
Indian HY Corporates (Cont.):
•
•
•
•
•
Adani Complex: Our fundamental pecking order on Adani bonds remains unchanged: ADSEZ / ADINCO (with strong cash generations and growth potential) >
ADANEM (the best debt maturity profile, and capex are constrained by its regulated business) > ADTIN (heavy capex pipeline from transmission and smart
meter business, despite smart meter has less cash lock-up in under-construction projects vs. that in transmission) > ADGREG / ARENRJ (stable operating
profile, while split-rated). AGEL’s successful refinancing of USD1.06bn construction facility due in March 2025 is a strong evidence of proven access to bank
lenders. Our base case is about the Trump administration might make a favorable outcome on Adani group companies, considering the Adani group can invest
~USD10bn in the US energy security and infrastructure projects including data centers to create ~15k US jobs. In our worst-case scenario, we expect the Adani
group might opt for an out-of-court settlement to avoid a guilty verdict from the US authorities. Overall, we are Overweight ADANEM 2030 at Z+347bp/7.2%
and 2031 at Z+362bp/7.4%, ADSEZ 2027-2031 at 7.0-7.7% including ADSEZ 2031 at 7.0%/81.7c and ADGREG 2042 at 8.5%/87.5c.
Agrochemical: Despite stronger-than-expected 4QFY25 earnings and meaningful debt deleveraging efforts, as well as the scheduled redemption of UPLLIN
perps on 26 May, we are Neutral on the UPLLIN 2028 at 6.6%/94.7c and UPLLIN 2030 at 6.9%/90.2c when we believe the current valuations have reflected
these positive developments. Management guided a subdued 1HFY26 business performance going forward, before a business improvement in 2HFY26, where
we suspect 4QFY25 results could be partly due to front-loaded purchases ahead of Trump’s tariff chaos in April. Lastly, we believe UPLLIN could tap the USD
bond market to replenish its liquidity position given the cash used for the perps redemption.
Steel: We do not see value in JSTLIN 2026-2032 at 6.3-7.1% amid the Indian Supreme Court’s (SC) order of liquidating Bhushan Power and Steel (BPSL),
where JSTL acquired BPSL for INR197bn in 2021 from the NCLT (via a mix of equity and OCDs of ~INR85.5bn and the rest by debt, where the OCDs violated
the IBC norms). BPSL’s production capacity expanded to 4.5mtpa (from 2.75mtpa) post the acquisition (~13% of JSTL’s total production capacity) and
accounted for ~10% of JSTL’s consolidated EBITDA, with incurred total capex in BPSL estimated at ~INR35-40bn. We believe it makes sense for JSTL to file a
review petition against the SC. If JSTL losses in the review petition, it could file curative petition for the final judge. The worst case would be JSTL fails both
review petition and curative petition, then JSTL has to return BPSL back to the NCLT. Notably, JSTL had paid INR197bn with an indemnity provision to ensure
the settlement funds will be paid back in case the Supreme Court ruling against JSTL in the future litigations.
IT Services: Small Overweight HEXWIN 5.375% 2026 at 6.5%/98.4c with an expectation it can be prepaid early in 4Q25, i.e., YTC at par in October 2025 at
9.1%. As reported by media outlets since February 2025, CA Magnum is in talks with international banks for ~USD1bn syndicate loan to refinance its HEXWIN
bonds with a potential door-to-door tenor of 5-year and ~SOFR+333bp. The current attributable Hexaware equity stake held by CA Magnum covers ~4x of CA
Magnum’s USD senior bonds.
Airports: 9MFY25 domestic/international passenger traffic registered at ~113%/114% of 9MFY20 levels for Delhi, ~130%/113% of levels for Hyderabad. With
the implementation of CP4 tariffs on DIAL for FY25-FY29 (despite a year delay), the new aero revenue during the CP4 is expected to yield at ~INR360/person
from ~INR140-145 levels earned in CP3, which should boost DIALs’ EBITDA by ~70-90% y-o-y in FY26. In 3QFY25, DIAL delivered LTM EBITDA of INR13bn
vs. net debt at INR144bn which indicated net leverage of 11.0x. GHIAL delivered LTM EBITDA of INR16bn vs. net debt at INR72bn which indicated net leverage
of 4.5x. Despite the shorter dated GMRLIN 2026 and DIALIN 2026 at 5.8-6.0% just as a fair carry, we do not see attractive valuations in GMRLIN 2027 at 6.3%
and DIALIN 2029 at 6.2%.
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Trading Strategy: Asian HY Corporates
Indian HY Corporates (Cont.):
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Vedanta: Remain Overweight VEDLN bonds with a preference on VEDLN 10.875% 2029 at 11.2%/98.7c > VEDLN 9.85% 2033 at 11.0%/93.7c / VEDLN
9.475% 2030 at 10.9%/94.2c > VEDLN 10.25% 2028 at 10.4%/99.5c > VEDLN 11.25% 2031 at 11.2%/100.2c, despite VEDLN 10.875% 2029’s relative
technicals weakness due to its large size (USD1.2bn) vs. the rest of tranches at ~USD300-550m each. Our preference considers the upside scenario of ~9-10%
yield for VEDLN bonds should there is a bull market, and the downside scenario of ~14-15%/price floor of ~80c which we should see meaningful demand from
private credits/special situation investors (although VEDLN bonds so far have not reached to these levels since the Liberation Day). We forecast FY26
consolidated EBITDA at ~USD4.5-4.6bn (of which ~USD2.0bn from aluminum, ~USD2.0bn from HZL and ~USD0.2bn from Zinc International, as well as
~USD0.25bn from O&G), with price assumptions of LME aluminum at ~USD2.3-2.4k/t, zinc at ~USD2.5-2.6k/t and Brent at ~USD55-60/bbl. This also implied
FY26 attributable FCF to VRL at ~USD0.7bn vs. management’s guidance of ~USD0.8bn. At the holdco parent VRL level, with the upcoming FY26 maturing
external debt of ~USD0.9bn (excluding intercompany loan of ~USD0.2bn due in January 2026) and annual interest cost of ~USD0.6bn, we believe this can be
addressed by the receipt of brand fees of ~USD0.4bn in April 2025, attributable FCF as dividends of ~USD0.7bn and the recent ~USD0.5bn loan facility entered
on 17 April, as well as any further loan raising activities during FY26. Regarding the 80%-owned KCM copper mine, while management expect the project to be
cash flow positive in FY26 (with annual copper production to increase to ~150-180kt in FY26 from ~45kt in FY25), we expect the capex of ~USD300m+ to be
incurred in FY26 to rely on project financing/bank loan/any potential US stock listing. Regarding VDL’s demerger plan, management expect it to remain on-track
for a targeted completion by September 2025, following the filing of a second motion petition on 5th March 2025.
Highways: Neutral on IRBIN 7.11% 2032 at 7.5%/98.2c. We prefer the shorter dated RNW 2026 renewables blended holdco bonds which also relatively higher
yield vs. the holdco bond IRBIN 2032, although we see a healthy growth in toll revenue across the wholly owned project assets, Private InvIT (IRB Infrastructure
Trust, 51% owned by IRB Infrastructure Developers) and Public InvIT (IRB InvIT Fund, 16% owned), i.e., delivered toll revenue growth in April 2025 of +8% y-oy/+2% m-o-m, +11% y-o-y/+3% m-o-m, +10% y-o-y/+4% m-o-m, respectively. While the proposed asset sale in November 2024 from Private InvIT to Public
InvIT reduces to 3 assets (from 5 originally) with targeted timeline to complete by 2QFY26, i.e. Hapur-Moradabad NH-9, Kaithal-Rajasthan NH-152/65 and
Kishangarh-Gulabpura NH-79/79A with aggregate EV of ~INR85bn (of which net debt is ~INR36bn), this is still a positive sign for IRB’s capital recycling ability
when it can free up the debt raising headroom on Private InvIT to undertake new under-construction projects.
Biopharmaceutical: We believe the yield/price level of BIOLIN 6.67% 10/2029 at 9.0%/91.6c is about balanced risk-reward, when we see the upside at
~8%/95c vs. the downside at ~10%/85c (vs. the lows at ~12.8%/80c in early April 2025 post the Trump’s tariff announcement, but we see significant deescalation in tariff currently). Should BIOLIN trade at high-80c we will see a better risk-reward as a buy. Regarding the Trump’s executive order on cutting drug
prices, we tend to believe the price impact should be more on generics (by ~50%+ on retail prices before netting rebates, according to our conversation with
industry experts) vs. biosimilars (by ~15-20%). Notably, Pharmacy Benefit Managers (PBMs) in the US generally receive ~5-20% rebates from drugmakers,
which could be a price buffer for drugmakers if Trump is looking to cracking down this part. That said, the executive order is still expected to face challenges
from the pharmaceutical industry in courts and Congress. Regarding Biocon Ltd’s 4QFY25 results, the group-wide quarterly revenue growth (+13% y-o-y) to
INR44bn was fueled by generics (+46% y-o-y, with the growth predominantly due to the launch of gRevlimid/Lenalidomide) vs. biosimilars (+4% y-o-y) and
Research Services (+11% y-o-y). Adjusted gross/net leverage registered at 6.1x/4.8x in 4QFY25 vs. 6.4x/5.5x in 3QFY25, on the back of gross debt at
INR184bn vs. cash at INR41bn. On a full-year basis, FY25 consolidated FCF was INR12bn on the back of capex at INR23bn and positive working capital inflows
of INR9bn. Notably the group did a non-recourse factoring at INR1bn during the year. Biocon has approved raising up to INR45bn via QIP, with the first tranche
expect to complete in few weeks by mid-June.
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Trading Strategy: Asian HY Corporates
Indonesian HY Corporates:
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2025 YTD gross supply broadly in line our forecast, while macro environment is tough with weakening domestic demand and higher fiscal deficit:
2025 YTD gross issuance registered at USD0.75bn (excluding LMEs), compared with our gross supply forecast of ~USD1.5bn in FY25. Redemption side 2025
YTD was USD1.2bn (including USD675m bonds due in 2026 being redeemed early in 2025), which indicated net supply of ~USD0.4bn currently. On the macro
side, our economists expect a slower GDP growth to 4.7% in 2025 and 4.9% in 2026 (vs. prior estimate of 5.0-5.2% penciled in December 2024), compared with
5.0% in 2024, on the back of weaker consumer sentiments and fiscal spending priorities (i.e., populist priority programs). The headroom for BI to cut policy rates
is considered as limited, in our economist’s view, and thus to maintain at 5.75% throughout 2025-2026. FY25 fiscal deficit is expected at 2.9% of GDP vs. the
government’s budget at 2.5% and fiscal deficit ceiling at 3.0%. USD/IDR FX rate is expected to hover at ~16.3-16.4k in 2025 vs. the spot of 16.2k. Bond Views
in Indonesian HY space are as follows:
Small Overweight BUMAIJ 7.75% 2026 at 8.3%/99.6c: a proven track record of stable business profile and onshore bank access. In FY24, BUMAIJ reported
revenues of USD1.8bn and EBITDA of USD314m. Gross debt stood at USD1.0bn (including the outstanding USD212m BUMAIJ 2/2026) vs. cash at USD195m
and the recently obtained accordion facility of USD250m from BCA in February 2025, besides the priced ~USD121m IDR sukuk in March 2025.
Neutral on MEDCIJ 2028-2030 at 7.6-8.6%: While we believe MEDCIJ’s credit profile (50% fixed price gas production) should be able to withstand under the
weaker oil price trend, i.e., every USD10/bbl oil price movement could translate into ~USD120-130m EBITDA movements, we believe MEDCIJ bonds’ upside is
constrained by (1) the company’s potential M&A-induced bond supply risk and (2) the plenty of O&G investment alternatives outside of Asia for global investors,
e.g. global HY energy index currently shows YTW of 8.3% with average remaining maturity of ~5.0 years and average ratings of BB-/B+ including BB- BTECN
2030 at 10.3%. In FY24, MEDCIJ generated O&G EBITDA of USD1.3bn, with RG gross debt at USD2.7bn vs. RG cash at USD586m (including restricted cash),
implying RG net leverage at 1.8x (vs. 2.5x mid-cycle leverage on the back of oil price assumption of ~USD65/bbl).
Neutral on INDYIJ 8.75% 2029 at 9.8%/96.5c: While the implementation of the revised royalty scheme for IUPK on 26th April, 2025 should help to save royalty
cost by ~USD4/t, i.e., a positive annualized EBITDA impact of ~USD120m from May 2025 assuming annualized coal production at ~30mt and HBA index to
hover at ~USD120/t, we prefer to wait for a lower entry (10-11%+ levels) when we still see volatility for the bond market. In 1Q25, INDYIJ reported LTM
revenues of USD2.4bn and adjusted EBITDA of USD183m (or annualized EBITDA of USD146m), with gross/net leverage at 5.6x/2.4x on the back of gross debt
at USD1.0bn vs. cash & investments at USD571m. The gold mining project Awak is expected to commission in 2H26 (skewed towards 4Q26), which could
deliver another annual EBITDA of ~USD180m based on spot gold at ~USD3.2k/oz and annual production of ~100koz.
Underweight PWONIJ 4.875% 2028 at 6.2%/96.4c: While PWONIJ has solid credit fundamentals (recurring revenues at ~85% of total in 1Q25) and net cash
position, i.e., net cash of INR3trn in 1Q25, and recently conducted partial tender offer of ~USD66m, our Underweight call comes from an RV standpoint
compared with weak BBB/BBB- Indonesian credits such as KRKPSC/BBKPIJ at similar yield levels. Meanwhile, PWONIJ’s potential rating upgrades from its
current BB+ rating is unlikely at least in the next 12 months as stated by Moody’s, S&P and Fitch.
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Trading Strategy: Asian HY Corporates
Indonesian HY Corporates (Cont.):
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Small Overweight PTSMGP 7.75% 2031 at 8.0%/99c: While SMGP has a short operating track record with the first generation unit commenced operations in
late 2019 and the concern about the use of unconventional screw expander technology (vs. traditional steam turbines), the stable operating performance and the
better-than-expected information disclosure should help to gain investors’ confidence, in our view. In FY24, SMGP delivered revenues of USD100m (+20% y-oy) and EBITDA of USD68m (+10% y-o-y), with DSCR registered at 2.4x (vs. min DSCR of 1.1x and phased distribution lock-up of <= 1.6x). Following the
recently commissioned Unit 5 (net capacity of 23MW) to add the group’s aggregate net capacity to 182MW, the capex requirements would be minimal, at least in
2025-2026 (i.e., guided growth capex of USD1.7m in 2025 and nil in 2026 vs. USD47m in 2024 and USD120m in 2023, before USD8.0m in 2027 while
management might look to conduct more drilling-related capex). Gross/net leverage stood at 8.7x/8.1x in FY24 vs. 7.5x/7.3x in FY23, with gross debt at
USD592m (flat q-o-q, including related party loan of USD248m) vs. cash at USD40m (+USD30m y-o-y). Looking forward, management guided revenues to
stable at ~USD113-117m in FY24-27 with opex maintained at < 30% of revenues and DSCR at > 2.5x.
Neutral on KIJAIJ 8% 2027 at 10.1%/96.5c: While KIJA reported strong consolidated performance, a majority of marketing sales and cash inflows came from
the JVs (including Kendal JV) instead of wholly owned entities, i.e., ~72% of marketing sales and ~96% of reported cashflow surplus in FY24 (at IDR917bn /
USD55m) came from the JVs. In 1Q25, KIJA held consolidated cash of IDR2.6trn, of which ~26% held at its wholly owned levels (~IDR0.7trn/USD41m). This
compared with Bank Mandiri loan amortizations of USD28m for the rest of 2025 and USD37m in 2026, which reflects an urgency of refinancing Bank Mandiri
loans in either USD bond market (window access uncertain) or domestic bank loan market. Given the bond price was ~99c in March 2025 and the debt
refinancing progress remains to be seen, we prefer to wait for a lower price entry but higher than the bottom of ~90c, i.e., ~3-4 points lower at ~12% yield.
Neutral on NICAU 11.25% 2028 at 8.8%/104.7c: While NIC managed to defer the remaining two ENC acquisition payments (of USD126.5m each) by 6 months
to January 2026 and April 2026 to pave a way for meeting the upcoming October 2025 bond amortization of USD44m (before another round of USD44m in April
2026), the holdco cash was USD67m in 1Q25 on the back of consolidated cash at USD216m, which has a higher motivation to refinance the outstanding
USD400m NICAU 2028 in the USD bond market, i.e. call price at 105.625c from 21 October 2025 to 20 October 2026. NIC generated 1Q25 EBITDA (including
FX gains/losses) of USD90m (annualized at ~USD360m) vs. 4Q24’s USD72m. The commissioning of ENC project (sometime in 2H25) could bring annualized
attributable EBITDA of ~USD250m assuming 55% stake in total has been acquired by April 2026.
Neutral on JPFAIJ 5.375% 2026 at 6.9%/98.7c: We believe the issuer is still monitoring the USD bond market, while engaging with a couple of onshore bank
lenders for further loan raising (of ~USD240m) as a back-up plan if the USD bond market is not available. JPFAIJ recently raised IDR3trn/USD178m from BCA
vs. the outstanding USD348m JPFAIJ 2026. JPFAIJ delivered softer earnings in 1Q25 with LB and DOC lowered to IDR19.2k (-5% q-o-q) and IDR5.5k (-10% qo-q) during the quarter, respectively. The April 2025 month lowered further to IDR15.4k/IDR2.5k amid the weakening consumer sentiment.
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Trading Strategy: Asian HY Corporates
Other Asian HY Corporates
Sector
Views and Recommendations
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Australia
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Overweight MINAU 2027-2030 at MINAU 8.5% 2030 at 9.1%/97.7c: 3QFY25 production performance (for the quarter ended March 2025) were a
modestly positive read, given the better-than-expected performance in lithium spodumene (SC) Mt. Marion project in compensating the lower
production volume in iron ore Onslow project. Cash burn situation was relatively better than our expectation, i.e., cash burn of ~AUD0.3bn during
3QFY25, tracked at ~39% of our 2HFY25 cash burn expectation (of ~AUD0.7bn) on the back of ~AUD500-550m 2HFY25 EBITDA forecast .
Onslow Iron carry loan balance (as a receivable for MIN) stood at AUD789m vs. iron ore prepayment obligation (as a payable) at AUD632m to be
amortized evenly on a quarterly basis over FY26-28. Liquidity position stood at AUD1.25bn (including cash at AUD0.45bn and fully undrawn
revolvers of AUD0.8bn), with the next maturing debt at USD700m NINAU 8.125% 5/2027. Looking forward, we expect MIN to deliver FY26
EBITDA of ~AUD1.7bn and positive FCF of ~AUD0.1bn (with ~AUD0.2bn working capital usage), assuming iron ore FOB cost excluding royalty
at ~AUD60-65/t vs. a 20% discount on 65% Fe (at ~USD95-100/t), as well as SC at ~USD800-850/t. We still expect MIN as a credit improvement
story going forward as a positive catalyst for yield compression, regardless of rating overhang.
Overweight KARAU 10.5% 2029 at 10.7%/99.5c: KAR has a defensive cash breakeven cost at ~USD25-30/boe (or ~USD40/boe including
capex), which should ride through the oil price headwind, and the bond offers ~250bp yield pick-up over Bloomberg high yield energy index with
average rating of BB-/B+ and remaining maturity of ~5.0 years. KAR’s 1Q25 operating performance was broadly in line with market expectation
and as a non-event read, despite a higher capex guidance resulting from the Neon oil field exploration. KAR had cash of USD191m in 1Q25 vs.
reported debt of USD350m due in 2029 (excluding lease liabilities of ~USD180m).
Neutral on ASLAU 7.5% 2029 at 6.4%/103c: Tight bond valuations compared with the global HY metals & mining index (average YTW of 7.5%;
average rating of BB- to B+; remaining maturity of 4.9 years), i.e., the yield differential increased further to ~110bp from ~70bp at end-2024, but
ASLAU’s more resilient credit fundamentals vs. other peers also make it hard to be a potential short candidate. Management affirmed the prior
F25 guidance, i.e. FY25 revenues at ~AUD3.4-3.6bn, EBIT(A) at ~AUD325-345m, net capex at ~AUD330m and reported net leverage at ~0.60.7x, as well as FCF of > AUD150m, which means a sequential credit improvements in 2HFY25 vs. 1HFY25. Liquidity position remained solid
with cash of AUD265m and undrawn revolvers of AUD335m, against short-term debt of AUD180m (i.e. the outstanding USD107m ASLAU 6.5%
10/2025).
Neutral on FMGAU 2030-2032 at 6.1-6.4%: Solid credit metrics with low gross/net leverage of 0.6x/0.2x in 1HFY25 (ended December 2024), on
the back of gross debt at USD5.4bn vs. cash at USD3.4bn, as well as LTM EBITDA of USD8.5bn. Both gross debt and cash were broadly flattish
q-o-q at USD5.5bn and USD3.3bn, respectively. With the guided C1 cost at ~USD18.5-19.75/wmt in FY25 for Hematite, this indicates total cost at
~USD50-55/t (including sustaining capex and interest expense of ~USD14-15/t) or total cost adjusted for product discounts to match 62% Fe at
~USD70-75/t, compared with the 62% Fe spot at ~USD99/t, which has an adequate buffer for any potential decline in iron ore price.
55
Trading Strategy: Asian IG Corporates
Other Asian HY Corporates (Cont.)
Sector
Views and Recommendations
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Japan
Rakuten Group (RAKUTN): We are Overweight on RAKUTN curve, viewing it as in the positive spiral on funding although expecting mobile
business growth to slow down. As the mobile business largely reached EBITDA breakeven and started small self-funding channels, cash burden
on the Rakuten Group should be lighter while the group has more balanced debt maturities after resolving the maturity wall in 2024. The next
catalyst is onshore rating improvement (R&I currently at BBB+ Negative outlook) and potential restarting of onshore bond financing. With
RAKUTN 2027-2029 at 6.7-7.7%, largely recovering back to pre “Liberation day” levels, we remain Overweight on the curve and prefer RAKUTN
over SOFTBK. We also like RAKUTN perps, especially for RAKUTN 5.125%, with RAKUTN 5.125% PNC26 (PX: 96.8, YTC: 8.3%, YTP: 9.3%
mid), RAKUTN 8.125% PNC29 (PX:95.8, YTC: 9.1%, YTP: 9.3% mid), and RAKUTN 6.25% PNC31 (PX:89.3, YTC: 8.4%, YTP: 9.4% mid), given
the high incentive for Rakuten to call the perps for reputational reasons and improving investor risk appetite for the RAKUTN complex.
• 1Q25 results delivered the first positive EBITDA on mobile excluding property tax (+JPY102m), while growth in new subscription slowed down
(+320k q-o-q to 7.8m) and ARPU stayed at ~JPY2,078 (JPY2,827 if adding ecosystem uplift). Capex lowered to only JPY10bn in 1Q25
(JPY81bn in FY24, JPY28bn in 1Q24). Management keeps the target to achieve FY25 mobile EBITDA breakeven.
SoftBank Group (SOFTBK): We are Underweight on SOFTBK curve with SOFTBK 2027-2031 at 6.1-6.6% (Z+229-274bp) and SOFTBK
6.875% PNC27 (PX:97, YTC: 8.4%, YTP: 9.0% mid), and will prefer RAKTUN 2027-2029 at 6.7-7.7% with a more stable credit metrics. SBG is
set to suffer from a significantly increasing LTV, which is highly likely to trigger a rating downgrade if they finished the planned investment plan via
raising debt. The LTV ratio will be highly impacted by volatile stock performance besides the rising debt trend. On the other side, we also expect
heavy bond supply both onshore and offshore to fund the investment plan as well as to repay the 1-year bridge loan (USD15bn for 1-year). While
we draw some comfort from SBG's strong funding channels onshore and decent management track record and thus do not expect a material
widening, we view current yields as too tight to provide enough of a buffer for the volatile tech stock performance and heavy investment plan.
• As of 4QFY24 (ended March-2025), SBG’s reported LTV ratio increased significantly to 18.0% from 12.9% in 3QFY24 or 8.4% in 4QFY23,
while management keeping the < 25% LTV guidance in normal times. Reported pro forma LTV after the OpenAI investment stands at ~20.1%.
S&P’s adjusted LTV ratio was at ~28% at end-March, +6% q-o-q, by excluding variable prepaid forward liabilities but including margin loans.
Pro forma LTV ratio adding the USD8.5bn investment in OpenAI is estimated to be ~30.7%, breaching the S&P downgrade trigger of 30% on
LTV, but will have some room if we count in the recent recovery of ARM stock (+20% from end-March) at ~28.5%. If we further include the
ARM's last install payment and Ampere payment in 2H25, LTV will be increased to ~32% (or 37% if include a USD20bn of 2 nd round OpenAI
Investment) even with current stock price.
• As of 4QFY24, cash level decreased to JPY2.6trn (-JPY0.7trn q-o-q) plus undrawn committed credit facilities of ~JPY0.7trn (a JPY1trn
decrease of loan capacity on Arm shares margin loan), covering 1.6x of bond maturities of JPY2.1trn over the next two years.
• The upcoming investment includes: (1) the last installment payment to SVF1 on ARM shares with a remaining amount of USD3.8bn in August
2025; (2) OpenAI investment: SBG finished the first USD10bn tranche of investment in OpenAI (USD1.5bn syndicated out, and the other
USD8.5bn under SVF 2). The second closing is set for December 2025 with a funding of up to USD30bn (USD10bn may be syndicated out) if
OpenAI Global completes a recapitalization of its economic waterfall by end-2025, or USD10bn if conditions have not been met. (3) SBG has
announced to acquire Ampere for USD6.5bn, which is expected to close in 2H25.
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Trading Strategy: Asian HY Corporates
Other Asian HY Corporates (Cont.)
Sector
Views and Recommendations
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Others
Philippines: Relatively insulated economy, where our economists expect GDP growth of 5.3% in 2025 (vs +5.7% in 2024). They also expect a
more accommodative monetary policy stance, with BSP to deliver 175bp of rate cuts in 2025, to 4.75% terminal rate, below 5.0% neutral rate.
Bond views:
• Small Overweight SMCGL perps: SMCGL has displayed an ability to refinance its USD maturities, improve its credit metrics while also
spending on future growth. The Mariveles Greenfield Power Plant has begun commercial operation in late FY24/early FY25 with offtake
agreements already in place with Meralco, and considerable progress has been made on Masinloc Units 4 and 5. SMCGL’s gross/net
leverage improved to 11.0x (-1x q-o-q) / 9.5x (-1x q-o-q) with gross debt (including both senior perps and RPCS) of PHP619bn (-5% q-oq) and cash of PHP80bn (+18% q-o-q). We expect the USD193m of SMCGL 7% PNC25 (PX: 99.50, YTC: 8.2%) to be called on the first
call date given SMCGL’s improving credit fundamentals, proven track record of refinancing capabilities in FY24 with capacity to improve
earnings/liquidity in FY25. On the other hand, Petron reported weak results with 1Q25 operating profit / revenues of PHP10bn (-7% y-o-y)
/ PHP194bn (-15% y-o-y, 53% of total SMC revenue), on the back of compressed refining margins and lower volumes; which dragged the
parent SMC’s performance as well. Although management reiterated sufficient funds to call the USD500m outstanding of SMCPM
PNC25, we are Neutral on SMCPM 5.5% PNC25 (PX: 99.63, YTC: 7.6%) and PCORPM 5.95% PNC26 (PX: 98.12, YTC: 8.2%) and
prefer the SMCGL perps instead.
• Small Overweight ICTPM 5% PNC2/26 (PX: 99.18, YTC: 6.3% mid) that we expect to be called on their first call date, but Neutral on
ICTPM 3.5% 2031 (PX: 90.08, YTW: 5.3%, Z+148bp mid). ICTSI reported resilient 1Q25 results with volume growth across all three
geographies, leading to another record high quarterly net income of USD240m (+14% y-o-y, +10% q-o-q). 1Q25 consolidated revenues
stood at USD745m (+17% y-o-y, +3% q-o-q) with 1Q25 throughput at 3.5m TEUs (+12% y-o-y, flat q-o-q). 1Q25 consolidated EBITDA
printed at USD490m (+18% y-o-y, +6% q-o-q), with EBITDA margin at 66% (+1pp y-o-y, +2pp q-o-q). 1Q25 yield per TEU improved
further to USD209 (+USD8 y-o-y, +USD4 q-o-q, excluding non-containerized terminals), with the US imposed tariffs having limited direct
impact on operations so far. Gross and net leverage stood at 2.2x (-0.2x q-o-q) and 1.8x (+0.1x q-o-q) in 1Q25, with cash of USD752m (32% q-o-q) and total debt (including perps as debt) of USD4.4bn (-2% q-o-q).
• Neutral on TELPM and GLOPM, although the longer dated TELPM 2050 at 6.1% / GLOPM PNC26 at 6.1% offer decent carry. The BBBrated PLDT reported 1Q25 EBITDA of PHP29bn (+1% y-o-y, -1% q-o-q) and gross/net leverage at 3.0x / 2.9x, while Globe Telecom
reported 1Q25 EBITDA of PHP21bn (-3% y-o-y, -5% q-o-q) and gross/net leverage of 4.2x / 4.0x.
• Neutral on shorter dated bonds like JFCPM 2030 (PX: 101.08 / YTW: 5.1%) that are well supported by strong onshore demand. Jollibee
reported solid 1Q25 results with robust domestic brands (Jollibee, Chowking), coffee and tea segment’s acquired brands (Compose
Coffee) supporting margins while the China business and Smashburger continued to lag. 1Q25 consolidated revenues stood at
PHP70.2bn (+15% y-o-y, -5% q-o-q), from system-wide sales (SWS) at PHP103.2bn (+19% y-o-y, -6% q-o-q). Adjusted gross and net
leverage (including lease obligations) remained stable at 3.7x (flat q-o-q) and 2.9x (+0.1x q-o-q) respectively, after having successfully
refinanced their 2025 callable perp in March with strong technical support.
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Trading Strategy: Asian HY Corporates
Other Asian HY Corporates (Cont.)
Sector
Views and Recommendations
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Others
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Neutral on VLLPM: Reported muted 4Q24 earnings with consolidated revenues of PHP7bn (-14% y-o-y, -20% q-o-q), split as real estate
sales of PHP3bn (-9% y-o-y, -23% q-o-q) and rental income of PHP4bn (-11% y-o-y, -2% q-o-q). 4Q24 gross/net leverage were broadly
stable at 8.1x (flat q-o-q) / 8.0x (flat q-o-q), from gross debt of PHP188bn (-2% q-o-q) and cash balance of PHP4bn (-78% q-o-q). While
the recent USD150m syndicated loan at ~6.41%, arranged by SMBC via a syndicate of Taiwanese banks, exhibits funding access, the
delay of over three months for a relatively small loan size shows some strain in funding channels. Upcoming maturities include
~PHP14bn of corporate notes, ~PHP13bn of retail PHP bonds and ~PHP18bn of bank loans, which management has indicated ability to
refinance from multiple sources. In FY24, 87% (flat y-o-y) of VLL’s rental income and 34% (-3pp y-o-y) of rental receivables were from
related parties (with no impairment), of which the All-Value Group contributed 78% and 32%, respectively. The only receipt against all
receivables from related parties totaling PHP46bn in FY24 / PHP34bn in FY23, were land parcels worth PHP874m / PHP2bn. We view
the positive news from VLL as “too little too late”, which, along with the unsatisfactory and delayed 4Q24 / FY24 results, do not justify a
constructive view even at lower prices. We had changed our view on VLLPM 2027 (PX: 87.50, YTW: 14.2%) and VLLPM 2029
(PX:80.75, YTW: 15.8%) to Neutral from Small Overweight, and would prefer to stick to higher quality names within the Philly corporates
space.
Mongolia: Overweight MONMIN 8.44% 2030 at 10.5%/92.2c: While the outcome on the UHG mining license to be determined by the Mongolian
government’s formed working group remains unclear (vs. our base of hiking the royalty rates instead of transferring partial stake in the UHG mine
for free), we believe MMC should have a sufficient liquidity position to weather royalty hikes, if any, besides the 50%-owned gold mining JV to be
commissioned from 2H25 to add attributable run-rate annual EBITDA of ~USD100m based on gold price spot at ~USD3.3k/oz vs. AISC of
~USD0.9k/oz and gold production of ~80-85koz. Excluding the earnings contribution from the gold mining JV, We forecast MMC to generate FY25
revenues/EBITDA of ~USD780m/USD340m by assuming HCC ASP at ~USD110-120/t, royalty rate at ~8% of coal ASP before the outcome of
working group, HCC cash cost excluding royalty at ~USD65-70/t, and therefore FCF would be ~USD50m. An increase in royalty tax rate to ~1617% from the current ~8% will lead to FCF neutral, in our view. Pro-forma cash stood at ~USD240m vs. ~USD370m including USD20m 2-year
loan due in December 2026.
Vietnam: Small Overweight MONDFI 5.125% 2029 at 6.7%/97.1c: Continues to deliver stable business operations with LTM reported EBITDA of
~USD240m (adding back ~USD105-110m quarterly amortization of loan receivables in relation to construction performance obligation under the
PPA). Gross/net leverage lowered further to 2.1x/1.9x in FY24 vs. 2.5x/2.3x in FY23, with DSCR hovering at ~1.5-1.6x. The bond’s remaining
WAL is ~2-year only, which was helped by ~15-19% of annual principal amortization on the USD bonds, i.e. ~32% of total principal has been
amortized currently.
58
Appendix – Data and Chart Pack
59
Appendix – Data and Chart Pack
Relative Value Charts – Asian Sovereigns
280
IG Sovereigns - 10Y
270
MEX '37s
260
250
240
230
220
REPHUN '36s
Z-Spread, Mid (bp)
210
200
190
ISRAEL '34s
180
170
PERU '35s
160
150
CHILE '37s
LATVIA '34s
140
130
120
110
100
90
80
70
60
POLAND '34s
KSA '35s
INDOIS '34s
INDON '35s
KAZAKS '35s
URUGUA '34s
PHILIP '35s
HKINTL '33s
RAKS '35s
QATAR '35s
UAE '34s
ADGB '34s
3
AA
4
AA-
5
A+
6
A
7
A-
8
BBB+
9
BBB
10
BBB-
60
Appendix – Data and Chart Pack
Z-Spread, Mid (bp)
Relative Value Charts – Asian Sovereigns
340
330
320
310
300
290
280
270
260
250
240
230
220
210
200
190
180
170
160
150
140
130
120
110
IG Sovereigns - 30Y
REPHUN '52s
ISRAEL '54s
KSA '54s
PERU '54s
POLAND '54s
INDOIS '54s
CHILE '54s
INDON '54s
ADGB '54s
UAE '52s
HKINTL '53s
3
AA
4
AA-
5
A+
6
A
7
A-
8
BBB+
9
BBB
10
BBB-
61
Appendix – Data and Chart Pack
Relative Value Charts – Asian Sovereigns
10.5
HY Sovereigns - 10Y
NGERIA '33s
10.0
EGYPT '33s
9.5
YTM, Mid (%)
9.0
IVYCST '36s
8.5
HONDUR '34s
8.0
ARMEN '25s
7.5
MONGOL '31s
UZBEK '32s
7.0
6.5
TURKEY '35s
DOMPEP '37s
GUATEM '37s
BRAZIL '35s
SERBIA '34s
COSTAR '34s
6.0
MOROC '33s
5.5
11
BB+
12
BB
13
BB-
14
B+
15
B
16
B-
62
Appendix – Data and Chart Pack
Asian Senior/Subordinated High Step-Up Perps
Type
Senior
Senior
Senior
Senior
Senior
Senior
Senior
Senior
Senior
Senior
Senior
Senior
Senior
High
Senior
StepSenior
Up
Senior
Senior
Senior
Senior
Senior
Sub
Sub
Sub
Sub
Sub
Sub
Sub
Group
Perpetual Bond
Bond Rating
(M/S/F)
Amt.Out.
(USD m)
Issue
Date
China IG Corp
HUANEN 3.08 PERP
A2/-/500
Dec/20
China IG Corp
HUADIA 3 3/8 PERP
A2/-/500
Jun/20
China IG Corp
CHPWCN 3.45 PERP
-/-/BBB
300
Sep/20
China IG Corp
CHPWCN 3.08 PERP
-/-/BBB
500
Apr/21
China IG Corp
CNSHAN 6 1/2 PERP
A3/-/BBB+
900
May/24
China IG Corp & FI Senior High Step-up Perps Average
Non-China Corp HKAA 2.1 PERP
-/AA/750
Dec/20
Non-China Corp HKAA 2.4 PERP
-/AA/750
Dec/20
Non-China Corp ICTPM 5 PERP
-/-/300
Jul/20
Non-China Corp GLOPM 4.2 PERP
-/-/600
Nov/21
Non-China Corp SMCPM 5 1/2 PERP
-/-/500
Jul/20
Non-China Corp SMCGL 7 PERP
-/-/193
Oct/20
Non-China Corp SMCGL 5.7 PERP
-/-/493
Jan/20
Non-China Corp SMCGL 5.45 PERP
-/-/684
Jun/21
Non-China Corp SMCGL 8 3/4 PERP
-/-/900
Sep/24
Non-China Corp SMCGL 8 1/8 PERP
-/-/600
Dec/24
Non-China Corp PCORPM 5.95 PERP
-/-/550
Apr/21
Non-China Corp NDPAPE 14 PERP
-/-/400
Jun/24
Non-China Corp NWDEVL 6.15 PERP
-/-/345
Jun/22
Non-China Corp NWDEVL 5 1/4 PERP
-/-/999
Jun/20
Non-China Corp NWDEVL 4 1/8 PERP
-/-/1,144
Jun/21
Non-China Corp Senior High Step-up Perps Average (Excluding NWDEVL)
China IG Corp
CHPWCN 4 1/4 PERP
Baa2/-/500
Apr/22
China IG Corp
HUANEN 5.3 PERP
A3/-/500
Jul/24
China IG Corp
CHPWCN 4.65 PERP
-/-/BBB300
Oct/24
China IG Corp
CHCOMU 3.65 PERP
Baa2/-/500
Feb/20
China IG Corp
CMHI 3 7/8 PERP
Baa2/-/200
Oct/20
China IG Corp
GEZHOU 4.15 PERP
Ba2/-/200
Nov/20
China IG FI
CFAMCI 4 1/4 PERP
-/-/BB- *250
Sep/20
Asia Subordinated High Step-up Perps Average
Source: Company Filings, Nomura
First Call Initial
Date
Spread
Bullet ZPerp/Bullet Perp /
sprd adj
Premium
Senior
by tenor
(bp)
multiple
(bp)
84
HUANEN 1.6 26
53
31
1.58x
285
HUANEN 1.6 26
51
234
5.60x
37
N/A
N/A
N/A
N/A
94
N/A
N/A
N/A
N/A
112
CNSHAN 4.1 25
37
75
3.04x
113
3.41x
82
HKAA 4.875 26
43
39
1.90x
102
HKAA 4.75 28
69
33
1.47x
194
ICTPM 5.875 25
151
43
1.28x
207
GLOPM 2.5 30
99
108
2.09x
414
N/A
N/A
N/A
N/A
383
N/A
N/A
N/A
N/A
395
N/A
N/A
N/A
N/A
459
N/A
N/A
N/A
N/A
475
N/A
N/A
N/A
N/A
489
N/A
N/A
N/A
N/A
434
N/A
N/A
N/A
N/A
842
N/A
N/A
N/A
N/A
N/A
NWDEVL 5.875 27 1,695
N/A
N/A
15,005 NWDEVL 5.875 27 1,725
N/A
N/A
5,402 NWDEVL 5.875 27 1,784
N/A
N/A
55
1.69x
90
N/A
N/A
N/A
N/A
91
HUANEN 1.6 26
68
23
1.34x
95
CHPWCN 4.3 27
86
9
1.10x
118
CHRAIL 3.25 26
58
60
2.03x
52
CMHI 4.75 25
58
-7
0.89x
219
N/A
N/A
N/A
N/A
195
CFAMCI 4.625 26
104
92
1.88x
35
1.45x
Step-Up
Feature
1st Coupon
Reset if Not
Called
Mid
Price
($)
Yield
to Call
(%)
Yield Perp Zto Perp Sprd to
(%)
Call (bp)
Dec/25
Jun/25
Sep/25
Apr/26
May/27
265.1bp
306.5bp
318.9bp
225.6bp
178.1bp
+300bp (Y5)
+300bp (Y5)
+300bp (Y5)
+300bp (Y5)
+300bp (Y3)
9.80%
10.21%
10.33%
9.40%
8.80%
98.88
99.65
99.53
98.30
102.95
5.18
7.24
4.78
5.12
4.95
10.24
10.85
10.80
9.78
9.01
Mar/26
Mar/28
Feb/26
Aug/26
Jul/25
Oct/25
Jan/26
Dec/26
Jun/29
Dec/29
Apr/26
Jun/27
Jun/25
Mar/26
Mar/28
169.7bp
173.6bp
489.6bp
302.7bp
523.7bp
669.9bp
405.4bp
465.5bp
523.2bp
390.4bp
507.4bp
938.0bp
320.1bp
488.9bp
285.8bp
+300bp (Y5.5)
+300bp (Y7.5)
+250bp (Y6)
+250bp (Y5)
+500bp (Y5)
+250bp (Y5)
+250bp (Y6)
+250bp (Y5.5)
+250bp (Y5)
+250bp (Y5.25)
+250bp (Y5)
+500bp (Y3)
+300bp (Y3)
+300bp (Y6)
+300bp (Y7)
8.84%
9.17%
11.54%
9.67%
14.38%
13.34%
10.70%
11.30%
11.88%
10.55%
11.72%
18.40%
10.22%
12.03%
10.00%
97.75
93.81
99.18
97.83
99.43
99.50
98.38
95.63
100.75
97.95
97.80
103.05
63.00
40.50
29.50
5.02
4.79
6.22
6.12
8.45
8.19
8.23
8.52
8.53
8.68
8.50
12.26
3890.53
154.23
57.81
8.60
8.14
11.16
9.36
14.78
13.66
11.19
11.54
10.87
9.96
12.04
17.17
16.60
26.01
24.41
Jan/27
Jul/27
Jul/29
Nov/26
Oct/25
Aug/25
Sep/25
157.5bp
77.5bp
76.6bp
211.7bp
362.3bp
376.1bp
397.9bp
+300bp (Y5)
+300bp (Y3)
+300bp (Y5)
+300bp (Y5)
+300bp (Y5)
+300bp (Y5)
+300bp (Y5)
8.72%
7.80%
7.91%
9.26%
10.77%
10.91%
11.12%
99.13
101.13
99.75
97.90
99.60
99.38
99.25
4.81
4.73
4.72
5.12
4.92
6.63
6.35
8.29
8.18
6.61
8.81
11.19
10.79
11.59
Referencing
Senior Bullet
63
Appendix – Data and Chart Pack
Asian Low Step-Up Perps (Based on Call at First Call Date Scenario) and FFL Perps (Based on Non-Call Scenario)
Type
Group
Perpetual Bond
Sub
Non-China Corp
CHINLP 5.45 PERP
Sub
Non-China Corp
HYSAN 7.2 PERP
Sub
Non-China Corp
SCGAU 5 1/8 09/24/2080
Sub
Non-China Corp
Sub
First Call Initial
Date
Spread
1st Coupon
Reset if Not
Called
Mid
Price
($)
Yield
to Call
(%)
+25bp (Y10.25);
+75bp (Y25.25)
5.15%
102.00
4.99
5.91
119
CHINLP 2.125 30
88
31
1.35x
7.42%
98.00
7.66
8.25
385
HYSAN 2.82 29
179
205
2.14x
8.58%
97.25
5.76
8.02
195
SCGAU 4.375 30
121
75
1.62x
7.79%
97.13
6.65
8.44
259
HKTGHD 3 26
99
160
2.61x
7.88%
59.75
66.17
13.51
6,205
GLPSP 3.875 25
451
5,755
13.77x
7.87%
58.25
33.89
13.27
3,007
GLPSP 3.875 25
462
2,545
6.51x
7.54%
98.38
6.13
7.80
192
BHARTI 4.375 25
66
127
2.93x
8.47%
96.50
9.16
9.48
501
RAKUTN 11.25 27
274
227
1.83x
8.85%
88.75
8.72
9.65
488
RAKUTN 9.75 29
448
40
1.09x
8.15%
94.25
9.71
9.57
592
RAKUTN 9.75 29
421
170
1.40x
8.75%
97.38
8.22
9.04
440
SOFTBK 5.125 27
209
230
2.10x
6.90%
99.50
6.71
10.22
243
CHJMAO 3.2 26
225
Amt.Out.
(USD m)
Issue
Date
A3/A-/-
500
Jan/25
Apr/30
100.5bp
327.7bp +100bp (Y10.5);
+25bp (Y10);
443.5bp
+75bp (Y30)
+25bp (Y10.5);
364.2bp
+75bp (Y25.5)
+25bp (Y10);
373.5bp
+75bp (Y25)
+25bp (Y11);
372.5bp
+75bp (Y26)
+25bp (Y10.5);
339.0bp
+75bp (Y25.5)
+25bp (Y5);
432.8bp
+75bp (Y25)
+25bp (Y10);
470.6bp
+75bp (Y30)
+25bp (Y5);
400.0bp
+75bp (Y20)
+25bp (Y10);
460.4bp
+75bp (Y25)
+25bp (Y11);
275.0bp
+75bp (Y26)
Baa3/-/-
750
Mar/25
Sep/30
Baa1/BBB+/WD
1,312
Sep/20
Jun/30
CASHLD 4 PERP
Ba2/BB/-
750
Jan/21
Jul/26
Non-China Corp
GLPSP 4 1/2 PERP
-/NR/B+
850
May/21
May/26
Sub
Low
Step- Sub
Up
Sub
Non-China Corp
GLPSP 4.6 PERP
-/NR/B+
300
Jun/21
Jun/27
Non-China Corp
BHARTI 3.975 PERP
-/BB/BB
500
Mar/21
Mar/26
Non-China Corp
RAKUTN 5 1/8 PERP
-/B/-
750
Apr/21
Apr/26
Sub
Non-China Corp
RAKUTN 6 1/4 PERP
-/B/-
1,000
Apr/21
Apr/31
Sub
Non-China Corp
RAKUTN 8 1/8 PERP
-/B/-
550
Dec/24
Dec/29
Sub
Non-China Corp
SOFTBK 6 7/8 PERP
B2u/B+/-
1,750
Jul/17
Jul/27
Sub
China Corp
CHJMAO 6 PERP
B1/-/-
500
Feb/21
Feb/26
Yield Perp Zto Perp Sprd to
(%)
Call (bp)
Bullet ZPerp/Bullet Perp /
sprd adj
Premium
Senior
by tenor
(bp)
multiple
(bp)
Step-Up
Feature
Bond Rating
(M/S/F)
Referencing
Senior Bullet
Asia Subordinated Low Step-up Perps Average
Asia Subordinated Low Step-up Perps Average (Excluding GLPSP)
Type
Senior
Senior
Senior
Senior
Senior
Senior
Senior
Senior
FFL
Senior
Senior
Senior
Sub
Sub
Sub
Sub
Group
Perpetual Bond
Bond Rating
(M/S/F)
Non-China Corp CKPH 3.8 PERP
A2/-/Non-China Corp CKPH 3 1/2 PERP
A2/-/Non-China Corp HYSAN 4.85 PERP
Baa2/-/Non-China Corp NANFUN 5 PERP
Baa3/-/Non-China Corp NWDEVL 4.8 PERP
-/-/Non-China Corp NWDEVL 6 1/4 PERP
-/-/Non-China Corp ACNRGY 5.1 PERP
-/-/Non-China Corp ACENPM 4 PERP
-/-/Non-China Corp ACPM 5 1/8 PERP
-/-/Non-China Corp ACPM 4.85 PERP
-/-/Non-China Corp ACPM 3.9 PERP
-/-/Non-China Corp CKINF 4.85 PERP
-/BBB/Non-China Corp CKINF 4.2 PERP
-/BBB/Non-China Corp CKINF 4 PERP
-/BBB/Non-China Corp LIFUNG 5 1/4 PERP
B1/B/Asia FFL Perps Average (Based on Non-Call Scenario)
Source: Company Filings, Nomura
Amt.Out.
(USD m)
Issue
Date
First Call Initial
Date
Spread
300
500
445
500
700
1,300
300
400
260
365
400
650
300
300
650
Sep/20
Dec/20
Aug/20
Sep/20
Dec/20
Mar/19
Nov/20
Sep/21
Sep/17
Oct/19
Sep/21
Aug/17
Jun/21
Jul/21
Nov/16
Sep/23
Dec/23
Aug/23
Sep/23
Sep/23
Mar/24
Nov/25
Mar/25
Sep/22
Oct/24
Sep/26
Aug/22
Jun/26
Jul/26
Nov/21
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
Step-Up
Feature
1st Coupon
Reset if Not
Called
Mid
Price
($)
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
3.80%
3.50%
4.85%
5.00%
4.80%
6.25%
5.10%
4.00%
5.13%
4.85%
3.90%
4.85%
4.20%
4.00%
5.25%
60.55
55.55
65.25
67.55
25.50
27.00
81.75
64.25
82.30
76.80
62.05
77.05
67.05
64.05
49.25
Perp ZYield
Sprd to
to Perp
Perp
(%)
(bp)
865.32
6.28
267
1045.93
6.30
280
705.00
7.43
365
638.59
7.40
359
N.M.
18.82
1,489
898.63
23.11
1,915
49.79
6.24
232
191.02
6.23
256
74.48
6.23
231
74.44
6.31
246
44.42
6.28
265
120.99
6.29
243
48.47
6.26
255
46.67
6.24
258
238.38
10.66
685
Yield
to Call
(%)
Referencing
Senior Bullet
Bullet Zsprd (bp)
CKHH 3.375 50
CKHH 3.375 50
HYSAN 3.55 35
NANFUN 3.625 30
NWDEVL 4.5 30
NWDEVL 4.5 30
N/A
N/A
N/A
N/A
N/A
CKHH 3.375 50
CKHH 3.375 50
CKHH 3.375 50
LIFUNG 5.25 25
177
177
209
208
1,497
1,497
N/A
N/A
N/A
N/A
N/A
177
177
177
206
19
1.08x
798
128
3.20x
1.82x
Perp/Bullet Perp /
Premium
Senior
(bp)
multiple
90
103
157
151
-8
418
N/A
N/A
N/A
N/A
N/A
66
78
81
479
161
1.51x
1.58x
1.75x
1.73x
0.99x
1.28x
N/A
N/A
N/A
N/A
N/A
1.37x
1.44x
1.46x
3.32x
1.64x
64
CY19
CY20
WTI (USD/bbl)
46
53
Actual
Forward
Market Consensus
Brent (USD/bbl)
51
60
Actual
Forward
Market Consensus
Gold (USD/oz)
1,771
1,393
Actual
Forward
Market Consensus
Copper (USD/ton)
6,186
6,005
Actual
Forward
Market Consensus
Iron Ore (USD/ton)
108
93
Actual
Forward
Market Consensus
Aluminum (USD/ton)
1,706
1,794
Actual
Forward
Market Consensus
Zinc (USD/ton)
2,269
2,548
Actual
Forward
Market Consensus
Nickel (USD/ton)
13,970 13,861
Actual
Forward
Market Consensus
Lithium Spodumene 6% (USD/ton)
428
613
Actual
Lithium Hydroxide (USD/ton)
N/A
N/A
Actual
Lithium Carbonate (USD/ton)
10,059 6,358
Actual
Market Consensus
Coking Coal (USD/ton)
125
177
Actual
Forward
Market Consensus
Thermal Coal (USD/ton)
60
78
Actual
Forward
Market Consensus
Palm Oil (MYR/ton)
2,800
2,174
Actual
Forward
Market Consensus
Commodity Price Table
62
65
3,204
9,479
102
2,487
2,671
15,648
675
8,557
10,700
190
99
3,839
70
2,996
9,328
102
2,550
2,765
15,676
795
9,238
10,118
186
104
4,487
75
2,390
9,148
110
2,420
2,779
17,052
972
11,990
12,505
243
136
4,218
74
1,943
8,485
120
2,254
2,650
21,688
3,689
44,993
34,634
296
174
3,812
76
1,802
8,805
121
2,701
3,475
25,618
4,386
72,137
71,531
363
358
5,115
59
1,799
9,320
159
2,477
3,005
18,467
977
22,751
19,169
221
137
4,459
Spot
(16 May)
67
CY25
YTD
71
CY24
70
CY23
71
CY22
54
CY21
Source: Bloomberg, Nomura
4,043
4,334
106
111
189
186
10,726
15,654
15,797
2,724
2,755
2,515
2,505
99
97
9,409
9,184
3,189
3,040
67
70
64
66
CY25F
3,843
4,225
122
112
209
197
12,500
16,325
16,500
2,726
2,763
2,528
2,604
92
93
9,310
9,600
3,356
2,988
64
68
61
65
CY26F
3,830
4,238
123
109
222
200
14,750
17,019
16,875
2,684
2,756
2,565
2,600
87
92
9,312
9,860
3,499
2,850
65
70
61
67
CY27/
Long-term
Appendix – Data and Chart Pack
Commodity Price Trend and Forecast
65
Source: Company Filings, Nomura
USD bond: guaranteed by co-issuers
Guarantor(s)
Operational Capacity (MW)
Solar
Wind
Wind-Solar-Hybrid
Hydro
Not Specified
Thermal/Biomass
Total Capacity
Offtakers Breakdown
SECI/NTPC/PTC
State DISCOMs
C&I Customers & Others
CoC
RG
370
621
991
37%
63%
Consolidated
679
1,450
2,129
12%
17%
72%
RG
611
611
34%
66%
61%
39%
57%
43%
-
USD bond: 101% if any entity other
than the permitted holders own >
50% voting interest in any coissuer / the permitted holders
cease to own > 26% voting interest
in any co-issuer AND rating decline
RG
570
570
USD bond: 101% if any entity other
USD bond: 101% if the
permitted holders (CDPQ and than the permitted holders own >
OMERS) own < 50% of APGL 50% of voting interest in CGEL AND
USD bond: 101% if any entity
rating decline, while rating decline
AND rating decline
other than the Adani Group
condition will be removed if the
owns > 26% of AGEL AND rating
acquirer does not fit energy
INR NCD/ECB: 101% if the
decline
assets/AUM of > USD10bn or IG
issuer ceases to be a
rated
subsidiary of APGL/APIPL
(1) DSCR > 1.1x otherwise default;
(2) graded DSCR with various
stages of distribution lock-up if
DSCR < 1.5x or FFO/net debt < 6%
for 25% distribution lock-up; (3)
Permitted debt baskets are RCF
facilities/working capital of
USD50m, finance leases of
INR100m
RG
930
930
USD bond: 101% if any entity other
than the Adani Group owns > 26% of
AGEL AND rating decline
6-month DSRA
Additional debt issuing from
Consolidated net leverage < 6.5x
CRGNEG 2033 RG2 provided that
(assets < 15 months operations will
two rating agencies confirming no
use projected EBITDA at P75 levels)
bond rating downgrade
N/A
Other Covenants
N/A
USD bond: (1) first ranking
mortgage over movable assets and
USD bond: issuer's share pledge,
rights & benefits under project
fixed charge over issuer's cash
documents of each co-issuer; (2)
account and floating charge over
first ranking exclusive charge over
issuer's assets other than Onshore
SDRAA and SDMCSA; (3) first
Debt/NCDs, negative lien over 75.1%
ranking charge over DSRA, RSA,
stake of Indian intermediate holdco
RDSA and SDEPA; (4) 100% coContinuum Green Energy (India)
issuer share pledge (other than
65% stake in Watsun Infrabuild)
USD bond proceeds: (a) for repaying
USD bond proceeds repaid existing
USD400m privately placed holdco
bonds at 6m SOFR+850; (b) the rest INR NCDs, existing shareholder
debt/OCDs and upstreaming to the
for funding 6-month holdco bond
holdco
interest, transaction cost (~2%),
development capex and GCP
(1) DSCR > 1.1x otherwise default; (2) (1) DSCR > 1.1x otherwise
Cash sweep if PLCR < 1.6x; (3) Graded default; (2) Cash sweep into
(1) Maintenance covenant of cash
SDRA if PLCR < 1.6x or senior
distribution lock-up/restriction if
flow coverage ratio of CEAPL + CGEL
DSCR < 1.55x or FFO/net debt < 6%; (4) debt > NPV of EBITDA forecast;
(1) DSCR > 1.3x otherwise
standalone > 1.1x; (2) general debt
sovereign equivalent offtakers > 55% (3) distribution restrictions if
cash trap; (2) Pay before MCS
basket of USD50m and working
DSCR < 1.55x (no distribution if
of EBITDA; (5) CFADS from sovereign
capital debt up to 3% of total assets
equivalent offtakers to service 100% < 1.35x) or FFO/net debt < 6%;
interest + 75% principal amortization (4) sovereign offtakers > 65% of
EBITDA
over the remaining life of PPAs
6-month DSRA
USD bond: co-issuers' assets,
contractual documents,
receivables under PPAs, escrow INR NCD/ECB: 51% of RG
shares, project assets and
and project accounts, and
documents, cash sweep and
100% shares pledge
enforcement proceeds
Scheduled Amortization (4.5%) +
Mandatory Cash Sweep (43.1%)
USD bond: guaranteed by coissuers
6.4Y
1.3Y
Continuum Green Energy Pvt Ltd: Founders (63%), MSIP (22%), Just
Climate (15%); CGEL: Founders (74%), MSIP (26%)
N/A
USD bond: guaranteed by CGEL
Additional debt cannot incur if
Senior debt sizing linked to NPV of
Debt capped at USD415m +
EBITDA forecast plus residual value of PLCR < 1.6x after incorporating
WC loan at USD30m
incremental debt
assets (based on PLCR > 1.6x)
6-month DSRA
USD bond: co-issuers' assets,
contractual documents, receivables
under PPAs, and 100% shares pledge
USD bond: 100% issuer
shares
USD bond proceeds refinanced
USD bond proceeds refinanced
USD bond proceeds invested
outstanding borrowings and
outstanding ECB/other liabilities and
in INR NCD issued by RG
other liabilities and funded
funded eligible green projects
general corporate purposes
10.0Y
11.6Y
AGEL Holdco: Adani Group (60.9%), Total Energies (19.8%);
AGEL RG1 and RG2: Adani Green (50%), Total Energies (50%)
Scheduled Amortization
(12.9%) + Mandatory Cash
Sweep (18.5%)
1.2Y
APGL: CDPQ (56.4%), OMERS
(22.7%)
INR NCD/ECB: guaranteed by
16 restricted subsidiaries
USD bond: no guarantee
Debt Sizing/Incurrence
Covenant
Interest Reserve Account
Security
Backbone Structure
Sponsors
Remaining WAL
Bond Amortization
Scheduled Amortization (76%),
i.e. ~3.8% per year on average
USD bond: guaranteed by coissuers
Adani Green Energy (UP), Prayatna
Developers and Parampujya Solar
Energy - subsidiaries under AGEL
Issuer(s)
Scheduled Amortization (100%),
i.e. ~5.6% per year on average
CGRNEG 7.5% 2033
6/26/2024
6/26/2033
Ba2/-/BB+
650
635
COGREN 9.5% 2027
8/24/2023
2/24/2027
-/BB-/B+
435
435
ARENRJ 4.625% 2039
10/15/2019
10/15/2039
Ba1/BB+/BBB363
303
Adani Renewable Energy (RJ),
Wardha Solar (Maharashtra),
Kodangal Solar Parks subsidiaries under AGEL
Continuum Energy Aura Pte Ltd - an
Co-issued by 8 onshore
Azure Power Energy - held by
SPV held by Continuum Green Energy
subsidiaries of CGEL/CGEIPL
APGL
Ltd (CGEL)
Continuum Energy RG2
Continuum Energy Holdco
Azure 2026 RG3
AZUPOE 3.575% 2026
8/19/2021
8/19/2026
WR/-/B
414
294
Adani Green 2039 RG2
ADGREG 6.7% 2042
3/12/2024
3/12/2042
Ba1/-/BBB409
406
Bond
Issue Date
Maturity Date
Ratings (M/S/F)
Amt Issued (USD m)
Amt Out (USD m)
Adani Green 2042 RG1
Name
Appendix – Data and Chart Pack
Summary of Indian Renewables Issuance Structures – Adani Green, Azure and Continuum
66
Source: Company Filings, Nomura
INR NCD/ECB: 101% if the
issuer ceases to be a
subsidiary of GEH
INR NCD/ECB: 101% if the
issuer ceases to be a
subsidiary of GEH
RG
590
1,491
129
INR NCD/ECB: 101% if the
issuer ceases to be a
subsidiary of GEH
RG
Operational Capacity (MW)
451
Solar
544
Wind
Wind-Solar-Hybrid
261
Hydro
Not Specified
Thermal/Biomass
1,257
Total Capacity
Offtakers Breakdown
SECI/NTPC/PTC
84%
State DISCOMs
16%
C&I Customers & Others
78
5,378
17%
71%
11%
2,209
23%
67%
11%
Consolidated
1,538
3,172
589
USD bond: 101% if any entity
other than the permitted
holders (GIC, ADIA, Orix and
founders) own > 50% of GEH
AND rating decline
USD bond: 101% if any
entity other than the
permitted holders (GIC,
ADIA, Orix and founders)
own > 50% of GEH AND
rating decline
USD bond: 101% if any
entity other than the
permitted holders (GIC,
ADIA, Orix and founders)
own > 50% of GEH AND
rating decline
Other Covenants
CoC
(1) RP subject to DSCR > 1.1x;
(2) Working capital debt
basket of USD100m for
general purposes, USD75m
for solar components,
USD75m once Pinnapuram
SPSP project is operational
(1) RP subject to DSCR >
1.15x; (2) debt incurrence
test of gross debt/EBITDA <
5.5x
(1) RP subject to DSCR >
1.15x; (2) debt incurrence
test of gross debt/EBITDA <
5.5x
Debt finance on the
construction of Pinnapuram
SPSP project of up to 75% of
~USD1.35bn total project
cost
N/A
N/A
N/A
INR NCD/ECB: first priority
mortgage of properties
INR NCD/ECB: first priority
mortgage of properties in
relation to the Pinnapuram
SPSP Project, project
accounts, share pledge of
Greenko AP01 IREP Pvt Ltd
N/A
N/A
INR NCD/ECB: first priority
mortgage of properties
USD bond: 100% issuer
shares, escrow account
Debt Sizing/Incurrence
Covenant
Interest Reserve Account
Security
USD bond: 100% issuer
shares
USD bond: 100% issuer
shares
USD bond proceeds
USD bond proceeds
USD bond proceeds
subscribed INR NCD issued subscribed INR NCD issued subscribed INR NCD issued
by RGs
by RGs
by RGs
GEH: GIC (58.0%), ORIX (20.0%), ADIA (14.55%), Founders (7.5%)
Backbone Structure
0.8Y
INR NCD/ECB: Financial
INR NCD/ECB: only the
agreement obliged RG to
borrower Greenko AP01 IREP
support debt
Scheduled Amortization
Scheduled Amortization
(19.5%) + Mandatory Cash
(10%)
Sweep (26.75%)
3.2Y
2.9Y
USD bond: guaranteed by
the parent GEH
Sponsors
Scheduled Amortization
(13.5%), i.e. 3% per year
INR NCD/ECB: Financial
agreement obliged RG to
support debt
USD bond: guaranteed by
the parent GEH
USD bond: guaranteed by the
parent GEH
GRNKEN 7.25% 2028
3/27/2025
9/27/2028
Ba2/-/BB
1,000
1,000
Greenko Wind Projects
(Mauritius) - an SPV held by
GEH - for 1.68GW pumped
storage project
GRNKEN 4.3% 2028
12/13/2021
12/13/2028
Ba2/-/BB
1,000
835
GRNKEN 3.85% 2026
3/29/2021
3/29/2026
Ba2/-/BB
940
827
Greenko Dutch BV - held by Greenko Power II - held by
GEH
GEH
Greenko Wind 2028 RG5
(Pumped Storage)
Greenko Power II
2028 RG4
Greenko Dutch
2026 RG1
Remaining WAL
Bond Amortization
Guarantor(s)
Issuer(s)
Bond
Issue Date
Maturity Date
Ratings (M/S/F)
Amt Issued (USD m)
Amt Out (USD m)
Name
Appendix – Data and Chart Pack
Summary of Indian Renewables Issuance Structures – Greenko
67
Source: Company Filings, Nomura
N/A
Scheduled Amortization
(20%) in 2024-2026
Security
USD bond: 101% if any
entity other than the
permitted holders own >
50% of RPPL or RPPL
ceases to own > 50.1% of
RG AND rating decline
RG
50
753
803
37%
63%
-
INR NCD/ECB: 101% if any
entity other than the
permitted holders own >
50% of RPPL or RPPL
ceases to own > 50.1% of
RG AND rating decline
RG
110
401
511
80%
20%
USD bond: 101% if any entity
other than the permitted holders
own > 50% of RPPL AND rating
decline
Consolidated
5,357
4,674
99
251
10,381
40%
44%
16%
USD bond: 101% if any entity
other than the permitted holders
own > 50% of RPPL/RNW AND
rating decline
Indirect Seurity
143
101
244
100%
-
USD bond: 101% if any entity
other than the permitted holders
own > 50% of RPPL AND rating
decline
Direct Seurity
230
230
100%
-
Operational Capacity (MW)
Solar
Wind
Wind-Solar-Hybrid
Hydro
Not Specified
Thermal/Biomass
Total Capacity
Offtakers Breakdown
SECI/NTPC/PTC
State DISCOMs
C&I Customers & Others
CoC
USD ECB: (1) Maintenance
(1) RP subject to ISCR >
(1) RP subject to DSCR >
minimum DSCR at 1.1x; (2) RP
1.3x; (2) cash trap in the
1.15x; (2) limit issuer's
subject to net priority debt
ability to incur debt, issue final year of the bond
leverage < 6.5x and consolidated
maturity
shares, etc
net leverage < 7.5x
N/A
Other Covenants
Net priority debt leverage < 6.5x
(1) Maintenance minimum DSCR
at 1.1x; (2) RP subject to net
Covenants on RPPL: (1)
priority debt leverage < 6.5x and
Maintenance minimum DSCR at
consolidated net leverage < 7.5x;
1.1x; (2) RP subject to net
(3) RG to maintain at least 5GW
priority debt leverage < 6.5x and
capacity post asset sales; (4) 1x
consolidated net leverage < 7.5x
security coverage with hard
asset security > 0.5x
Net priority debt leverage < 6.5x
Debt capped at USD620630m + third party credit
facilities and working
capital parent loans up to
USD30m
Net priority debt leverage < 6.5x
N/A
USD bond: property
mortgage, project
documents, trust and
retention accounts, 51%
issuers' equity
Debt Sizing/Incurrence
Covenant
N/A
INR NCD/ECB: project
assets, 51% issuers'
equity, property mortgage,
receivables under PPAs
USD bond: 100% IGPH
issuer shares, IGPH
accounts except INR
assets
N/A
N/A
USD ECB: senior unsecured
USD bond: charge over ICEH's
cash account and assets (other
than onshore debt), share
pledged by RNW over the shares
in ICEH to be put in place on a
best effort basis
Interest Reserve Account
N/A
2027 USD bond: property
mortgage, project documents in
relation to the 230MW SECI II
USD bond: 100% Diamond II
project, 100% (minus 1 share) of
issuer shares, floating charge
equity shares and 61.67% of
redeemable preference shares of
ReNew Power Services Private Ltd
USD bond proceeds
refinanced outstanding
debt of RG, funded capex
in eligible green
projects/on-lent to RPPL
and its subsidiaries, other
permitted uses
3.2Y
N/A
USD bond: guaranteed by
INR NCD/ECB: guaranteed co-issuers and RPPL for
USD ECB: no guarantee, issued by
life
by co-issuers and RPPL
RPPL
for life
USD bond: no guarantee
1.7Y
1.9Y
1.2Y
RNW - Economic Interest: CPPIB (53.6%), ADIA (15.1%), JERA (7.4%), Management (3.0%)
Voting Interest: CPPIB (33.1%), ADIA (21.7%), JERA (10.6%), Management (4.3%)
USD bond proceeds subscribed
~USD140m USD bond proceeds
on-lent to 3 SPVs with 243.8MW USD 10-year ECB with a put
option one business day prior to USD bond proceeds
for taking out all existing SPV
debt, of which ~USD90m in form offshore maturity date issued by subscribed INR NCD
of USD ECB amd ~USD50m in INR RPPL, and ultimately for repaying issued by RGs
INR debt and as equity
OCD; UOB on USD125m tap
component for OpCo projects
unknown
N/A
~USD140m proceeds in USD
ECB/OCD: issued by 3 SPVs with
243.8MW
USD bond proceeds prepaid
existing debt, on-lent to group
entities, funded capex
2027: Scheduled Amortization
(40%) in March 2023 via a
Lottery Method
1.8Y
USD bond: no guarantee
USD bond: guaranteed by RNW
USD bond: no guarantee
RPVIN 4.5% 2028
4/14/2021
7/14/2028
Ba3/-/BB585
585
Co-issued by 10
India Green Power
Holdings - an orphan SPV subsidiaries of RPPL
ReNew 2028 RG4
INGPHL 4% 2027
2/22/2021
2/22/2027
Ba3/-/BB460
399
RNW 7.95% 2026
4/28/2023
7/28/2026
Ba3/-/BB525
525
INCLEN 4.5% 2027
1/18/2022
4/18/2027
Ba3/-/BB400
400
India Clean Energy Holdings - a
Diamond II Ltd - a subsidiary of
subsidiary of ReNew Energy
ReNew Power Private Ltd (RPPL) ReNew Energy Global (RNW), the
Global (RNW), the ultimate
the intermediate onshore holdco
ultimate offshore holdco
offshore holdco
RPVIN 5.875% 2027
1/29/2020
3/5/2027
Ba3/NR/BB450
270
ReNew 2027 RG1
(INGPHL)
ReNew 2026 Holdco
Renew 2027 Holdco (INCLEN)
ReNew 2027 Holdco
Backbone Structure
Sponsors
Remaining WAL
Bond Amortization
Guarantor(s)
Issuer(s)
Bond
Issue Date
Maturity Date
Ratings (M/S/F)
Amt Issued (USD m)
Amt Out (USD m)
Name
Appendix – Data and Chart Pack
Summary of Indian Renewables Issuance Structures – ReNew
68
Source: Company Filings, Nomura
N/A
6-month DSRA
RG
243
91
334
6%
88%
6%
RG
1,391
1,391
93%
7%
505
46%
54%
-
450
56%
44%
-
USD bond: 101% if the promoters
(including Jasbir Singh, Sukhbir Singh and
Laxit Awla) cease to own > 51% voting
interest in any of the co-issuers AND rating
decline
RG
273
232
-
CoC
RG
450
-
USD bond: 101% if the permitted
holders (BM Munjal, Masdar, IFC,
INR NCD/ECB: 101% if the permitted
Abu Dhabi Future Energy) ceases to USD bond: 101% if the promoters
holders (ACME Solar Holdings and its
cease to own > 26% of JSW Hydro
control Future Energies Asia or
affiliates) ceases to own > 50.1% of
Future Energies Asia ceases to own Energy AND rating decline
12 restricted subsidiaries
> 50% of Hero Future Energies Pvt
Ltd AND rating decline
Other Covenants
Operational Capacity (MW)
Solar
Wind
Wind-Solar-Hybrid
Hydro
Not Specified
Thermal/Biomass
Total Capacity
Offtakers Breakdown
SECI/NTPC/PTC
State DISCOMs
C&I Customers & Others
No additional indebtedness allowed
besides working capital basket of USD20m
6-month DSRA
USD bond: co-issuers’ assets, project
accounts, project documents, rights over
PPAs, 100% co-issuers’ share pledge, DSRA
~USD170m for repaying existing RG debt,
~USD95m for funding non-RG capex via
interco loan and ~USD40m for FX hedging
cost and transaction fees
5.0Y
SAEL Industries/SIL (100%), of which Jasbir
Singh (28%) and Sukhbir Singh (23%)
Scheduled Amortization (4.52%) +
Mandatory Cash Sweep (40.96%)
USD bond: guaranteed by co-issuers
Co-issued by SAEL Ltd and 5 onshore
project SPVs
(1) DSCR > 1.1x otherwise default; (2)
distribution restrictions if DSCR <
(1) No restricted payment basket; (2) all
1.5x (no distribution if < 1.3x) or
excess cash generated within the RG will
FFO/net debt < 6%; (3) surplus cash
be accumulated during the bond life, i.e.
can only be released after building
MCS, DSCR & DSRA requirements; (4) cash trap
lock-up ~INR2bn cash for payments in
true up-liabilities
Debt capped at INR25.5bn + WC loan No additional debt can be added to Can only incur debt for working
capital and hedging purposes
RG, except WC of USD5m
at USD20m
6-month DSRA
(1) 100% distribution restrictions if
DSCR < 1.3x; (2) MCS starts from year
(1) 100% cash trapped in RG, no RP
0.5; (3) cash lock-up from year 4-5;
(4) surplus cash can only be released allowed
after building cumulative MCS, DSCR
& DSRA requirements
Debt Sizing/Incurrence
Covenant
Interest Reserve Account
Security
INR NCD/ECB: project assets and
INR NCD/ECB: 51% restricted
documents, 51% first ranking pledge
subsidiaries shares, project assets
of RG
USD bond: 100% India Cleantech
shares, India Cleantech accounts
except INR assets
USD bond: project assets, project
accounts, project documents, 51%
pledge issuer's shares
USD bond: issuer's share pledge,
assets except INR ECB, escrow
account
USD bond proceeds subscribed INR
NCD issued by RG
Backbone Structure
Sponsors
USD bond proceeds subscribed INR
ECB issued by eight subsidiaries
USD bond proceeds repaid existing
from RG. INR ECB repaid existing
project debt, extended/repay inter- green project-related INR debt
corporate loans and supported
general corporate purposes
5.1Y
JSW Energy Ltd: the Sajjan Jindal
family group (75%)
Mandatory Cash Sweep (49.5%)
USD bond: no guarantee
1.7Y
HFE: BM Munjal (53%), Masdar
(20%), IFC (27%)
Scheduled Amortization (2.75%) +
Mandatory Cash Sweep (27%)
INR NCD/ECB: guaranteed by Hero
Future Energies Pvt Ltd, onshore
intermediate parent of restricted
subsidiaries
1.2Y
ACME: Privately held by Manoj
Upadhyay and family
Scheduled Amortization (6.75%) +
Mandatory Cash Sweep (19.1%)
INR NCD/ECB: guaranteed by 12
restricted subsidiaries
USD bond: no guarantee
Clean Renewable Power (Mauritius) - JSW Hydro Energy Ltd - held by JSW
Energy Ltd
held by Hero Future Energies Asia
Remaining WAL
Bond Amortization
Guarantor(s)
USD bond: no guarantee
India Cleantech Energy - an orphan
SPV
HBSPIN 4.125% 2031
5/18/2021
5/18/2031
Ba1/-/BB+
707
502
CLRNPW 4.25% 2027
3/25/2021
3/25/2027
Ba2/-/BB363
292
ACMSOL 4.7% 2026
8/10/2021
8/10/2026
Ba3/-/BB334
264
Bond
Issue Date
Maturity Date
Ratings (M/S/F)
Amt Issued (USD m)
Amt Out (USD m)
Issuer(s)
SAEL RG1
SAELLT 7.8% 2031
7/31/2024
7/31/2031
-/-/BB+
305
296
JSW Hydro Energy RG1
Hero Future Energies/
Clean Renewable RG1
ACME Solar/
India Cleantech RG1
Name
Appendix – Data and Chart Pack
Summary of Indian Renewables Issuance Structures – Others
69
Appendix – Data and Chart Pack
Consolidated Financials of Indian Renewables – Adani Green, Azure Power and Greenko
Adani Green (AGEL)
Consolidated Financials
FY21
FY22
FY23
FY24
Azure Power (AGPL)
FY25
N/A
Holdco Bond
-/-/Ratings (M/S/F)
Operational Capacity (MW)
3,470
5,410
8,086
10,934
14,243
Power Generation (GWh)
5,482
9,426
14,880
21,806
27,969
Average Tariff (INR/kWh)
4.4
4.0
3.9
3.5
3.4
INR m
Financials
Total Revenues
31,240
51,330
77,760
92,200 112,120
Of which from: Power Supply
24,190
37,830
58,090
77,350
94,950
Operational EBITDA
22,350
35,100
54,900
73,180
88,770
Total EBITDA (incl LPS/interest income) 26,080
38,770
60,970
82,350
96,700
Adjusted Interest Expense
(15,850) (26,170) (29,110) (50,880) (54,920)
Cash Interest Expense
(15,890) (32,020) (51,390) (46,010) (49,850)
Net Income
1,820
4,890
9,730
12,600
20,010
Total Debt
242,090 528,320 542,230 648,580 800,400
Net Debt
231,900 512,390 522,390 560,940 767,080
Cash
10,190
15,930
19,840
87,640
33,320
Receivables
14,940
18,090
22,440
13,490
15,700
Equity
21,260
26,140
73,500 174,480 225,730
CFO
3,000
1,740
28,350
39,190
41,010
Capex & Investments
(61,430) (147,920) (33,760) (157,730) (247,760)
Free Cash Flow
(58,430) (146,180) (5,410) (118,540) (206,750)
Ratios
Operational EBITDA Margin
72%
68%
71%
79%
79%
Gross Debt/Operational EBITDA
10.8x
15.1x
9.9x
8.9x
9.0x
Net Debt/Operational EBITDA
10.4x
14.6x
9.5x
7.7x
8.6x
Operational EBITDA Interest Cover
1.4x
1.3x
1.9x
1.4x
1.6x
Total EBITDA Interest Cover
1.6x
1.5x
2.1x
1.6x
1.8x
Receivables Days
175
129
105
53
51
Average Funding Cost (Adjusted Interest) 6.5%
5.0%
5.4%
7.8%
6.9%
Average Funding Cost (Cash Interest)
6.6%
6.1%
9.5%
7.1%
6.2%
Debt/Capital
92%
95%
88%
79%
78%
Source: Company Filings, Nomura
FY21
FY22
FY23
FY24
1HFY25
LTM
N/A
-/-/1,990
2,752
3,041
3,041
3,041
3,495
4,551
5,854
6,047
5,920
4.3
3.9
3.5
3.5
3.5
INR m
15,236
18,341 20,748 21,307 20,601
15,133
17,621 20,744 21,264 20,558
10,987
14,677 14,146 13,014 12,573
11,574
15,687 15,814 14,868 14,427
(8,997) (12,940) (10,043) (12,885) (13,035)
(8,918) (10,656) (9,781) (9,191)
N/A
(4,201) (2,126) (2,322) (3,403) (3,425)
107,165 132,621 135,145 126,782 152,730
96,058 113,825 122,421 119,313 119,273
11,107
18,796 12,724
7,469
33,457
4,887
9,244
9,609
8,205
8,138
24,452
39,576 35,535 32,786 32,504
4,977
4,597
7,957
3,344
2,235
(18,919) (40,890) (5,950)
(405)
(214)
(13,942) (36,293) 2,007
2,939
2,021
72%
9.8x
8.7x
1.2x
1.3x
117
8.4%
8.3%
81%
80%
9.0x
7.8x
1.1x
1.2x
184
9.8%
8.0%
77%
68%
9.6x
8.7x
1.4x
1.6x
169
7.4%
7.2%
79%
61%
9.7x
9.2x
1.0x
1.2x
141
10.2%
7.2%
79%
61%
12.1x
9.5x
1.0x
1.1x
144
8.5%
N/A
82%
Greenko Energy Holdings (GEH)
1HFY25
FY21
FY22
FY23
FY24
LTM
N/A
Ba2/-/BB
5,188
5,299
5,299
5,460
5,460
9,745 11,386 11,766 11,619 11,410
4.4
4.5
4.5
4.4
USD m
595
723
693
661
630
573
685
665
639
613
438
583
540
448
424
451
591
590
492
493
(406)
(384)
(363)
(312)
(325)
(440)
(455)
(391)
(427)
(494)
(206)
(74)
17
(51)
(115)
4,853
4,842
4,804
5,259
5,895
4,178
4,404
4,250
4,518
5,017
675
438
553
741
878
566
673
436
293
372
1,860
1,811
1,553
1,846
1,948
(40)
(57)
379
218
41
(77)
(322)
(422)
(666)
(865)
(118)
(379)
(42)
(449)
(824)
74%
11.1x
9.5x
1.1x
1.1x
347
8.4%
9.1%
72%
81%
8.3x
7.6x
1.5x
1.5x
340
7.9%
9.4%
73%
78%
8.9x
7.9x
1.5x
1.6x
229
7.5%
8.1%
76%
68%
11.7x
10.1x
1.4x
1.6x
162
5.9%
8.1%
74%
67%
13.9x
11.8x
1.3x
1.5x
215
5.5%
8.4%
75%
70
Appendix – Data and Chart Pack
Consolidated Financials of Indian Renewables – ReNew (RNW, RPPL) and Continuum
ReNew Energy Global (RNW)
Consolidated Financials
ReNew Power Private Ltd (RPPL)
1HFY25
1HFY25
FY21
FY22
FY23
FY24
FY21
FY22
FY23
FY24
LTM
LTM
RNW 7.95% 2026 / INCLEN 4.5% 2027
RPVIN 5.875% 2027
Ba3/-/BBBa3/-/BB5,598
7,567
7,981
8,871
9,600
5,598
7,567
7,981
9,522
10,130
10,932
14,022
17,129
19,061
19,761
11,178
14,343
17,515 19,427
20,806
4.4
4.2
4.1
4.0
N/A
4.3
4.1
4.0
3.9
3.8
INR m
INR m
48,187
59,349
78,223
81,319
83,659
48,185
59,356
78,233 81,330
83,671
47,676
58,997
70,540
76,635
N/A
47,676
58,997
70,540 76,635
80,051
41,870
55,144
62,004
69,529
72,820
39,178
45,081
56,500 62,247
66,197
45,224
57,157
66,048
76,252
78,333
40,741
46,426
59,622 67,584
70,643
(38,281) (41,712) (50,966) (47,506) (48,288) (37,893) (40,083) (50,511) (46,241) (46,974)
(33,528) (34,553) (42,743) (52,190) (57,618) (33,603) (34,590) (42,751) (51,056) (55,658)
(8,032) (16,128) (5,029)
4,147
2,726
(8,269) (2,846) (3,029) 7,824
6,525
347,891 391,668 536,576 655,661 707,935 378,336 447,456 530,601 641,606 693,380
300,706 312,548 460,557 577,934 634,084 330,854 378,575 456,549 565,279 620,208
47,185
79,120
76,019
77,727
73,851
47,482
68,881
74,052 76,327
73,172
35,980
45,825
30,687
21,856
27,602
35,946
45,825
30,687 21,859
27,602
64,745 126,373 118,400 121,697 129,730 56,755 120,375 119,912 131,273 139,424
540
9,596
24,921
31,024
23,449
451
10,767
27,352 23,169
16,546
(24,516) (105,759) (86,454) (164,516) (145,734) (24,429) (106,131) (90,295) ######## (140,337)
(23,976) (96,163) (61,533) (133,492) (122,285) (23,978) (95,364) (62,943) ######## (123,791)
Holdco Bond
Ratings (M/S/F)
Operational Capacity (MW)
Power Generation (GWh)
Average Tariff (INR/kWh)
Financials
Total Revenues
Of which from: Power Supply
Operational EBITDA
Total EBITDA (incl LPS/interest income)
Adjusted Interest Expense
Cash Interest Expense
Net Income
Total Debt
Net Debt
Cash
Receivables
Equity
CFO
Capex & Investments
Free Cash Flow
Ratios
Operational EBITDA Margin
87%
Gross Debt/Operational EBITDA
8.3x
Net Debt/Operational EBITDA
7.2x
Operational EBITDA Interest Cover
1.1x
Total EBITDA Interest Cover
1.2x
Receivables Days
273
Average Funding Cost (Adjusted Interest) 11.0%
Average Funding Cost (Cash Interest)
9.6%
Debt/Capital
84%
Source: Company Filings, Nomura
93%
7.1x
5.7x
1.3x
1.4x
282
10.6%
8.8%
76%
79%
8.7x
7.4x
1.2x
1.3x
143
9.5%
8.0%
82%
86%
9.4x
8.3x
1.5x
1.6x
98
7.2%
8.0%
84%
87%
9.7x
8.7x
1.5x
1.6x
120
6.8%
8.1%
85%
81%
9.7x
8.4x
1.0x
1.1x
272
10.0%
8.9%
87%
76%
9.9x
8.4x
1.1x
1.2x
282
9.0%
7.7%
79%
72%
9.4x
8.1x
1.1x
1.2x
143
9.5%
8.1%
82%
77%
10.3x
9.1x
1.3x
1.5x
98
7.2%
8.0%
83%
79%
10.5x
9.4x
1.4x
1.5x
120
6.8%
8.0%
83%
Continuum Green Energy (CGEL)
3QFY25
FY21
FY22
FY23
FY24
LTM
COGREN 9.5% 2027
- / BB- / B+
757
855
1,159
1,590
2,235
1,407
1,746
1,896
2,671
N/A
5.4
4.8
4.9
4.7
N/A
INR m
7,909
9,012
9,703
12,948 15,003
7,546
8,430
9,351
12,565 14,746
5,528
6,928
6,951
9,273
9,466
5,837
7,318
8,049
9,871
10,314
(4,548) (5,851) (8,420) (10,997) (14,417)
(5,515) (6,479) (7,979) (9,127) (13,777)
(2,547)
(751)
(3,671) (5,980) (9,838)
51,166 62,181 105,261 140,751 144,856
42,733 54,676 77,485 127,107 128,305
8,433
7,505
27,776 13,644 16,551
3,548
4,510
2,180
1,555
1,118
5,508
7,056
3,302
(8,014)
526
(1,314)
(660)
1,398
777
(4,012)
(4,925) (14,443) (22,354) (32,425) (18,367)
(6,239) (15,103) (20,955) (31,648) (22,379)
70%
9.3x
7.7x
1.2x
1.3x
164
8.9%
10.8%
90%
77%
9.0x
7.9x
1.2x
1.3x
183
9.4%
10.4%
90%
72%
15.1x
11.1x
0.8x
1.0x
82
8.0%
7.6%
97%
72%
15.2x
13.7x
0.8x
0.9x
44
7.8%
6.5%
106%
63%
15.3x
13.6x
0.7x
0.7x
27
10.0%
9.5%
100%
71
Appendix – Data and Chart Pack
Restricted Group Financials of Indian Renewables – Adani Green, Azure and JSW Energy
Adani Green 2042 RG1
Restricted Group (RG)
RG Bond
Ratings (M/S/F)
Power Generation (GWh)
Average Tariff (INR/kWh)
Financials
Total Revenues
Of which from: Power Supply
Operational EBITDA
Total EBITDA (incl LPS/interest income)
Adjusted Interest Expense
Cash Interest Expense
Net Income
Total Debt
Net Debt
Cash
Loans to Related Parties
Receivables
Equity
CFO
Capex & Investments
Free Cash Flow
Intercompany Loan Cash Movements
Ratios
Operational EBITDA Margin
Gross Debt/Operational EBITDA
Net Debt/Operational EBITDA
Operational EBITDA Interest Cover
Total EBITDA Interest Cover
Receivables Days
Loans to Related Parties / Total Debt
Average Funding Cost (Adjusted Interest)
Average Funding Cost (Cash Interest)
Debt/Capital
Source: Company Filings, Nomura
FY21
FY22
FY23
FY24
Adani Green 2039 RG2
1HFY25
LTM
FY21
FY22
FY23
FY24
Azure 2026 RG3
1HFY25
LTM
ADGREG 6.7% 2042
ARENRJ 4.625% 2039
Ba1/-/BBBBa1/BB+/BBB1,908 1,892
1,895
1,913 1,884 1,328 1,313 1,320 1,328 1,295
4.8
4.8
4.7
5.0
5.5
3.7
3.7
3.7
3.7
3.9
INR m
INR m
9,454 9,143
9,031
9,811 10,586 5,114 5,019 5,010 5,091 5,221
9,124 8,995
8,923
9,587 10,362 4,926 4,843 4,852 4,949 5,079
8,601 8,356
8,153
8,910 9,618 4,716 4,718 4,634 4,751 4,869
9,516 9,655
9,882 10,961 12,029 5,245 5,466 5,569 5,946 6,319
(6,007) (5,972) (5,902) (5,353) (4,886) (1,802) (1,846) (1,929) (1,926) (1,846)
(3,091) (6,850) (5,194) (3,913) (3,100) (2,955) (2,601) (2,282) (2,415) (2,444)
194
(9)
400
1,193 2,787
936
1,152 1,181 1,511 1,850
64,636 65,576 64,380 54,770 53,649 28,565 29,685 31,101 31,097 30,040
61,082 63,222 60,744 54,443 53,412 28,296 29,587 30,238 30,746 29,494
3,554 2,354
3,636
327
237
269
98
863
351
546
6,797 7,682
9,271 14,119 15,678 3,032 4,979 6,623 9,359 10,365
2,580 3,023
2,381
1,928 2,224
684
687
616
603
515
5,253 4,520
9,743 14,174 16,437 4,074 4,694 5,694 7,296 8,852
5,104 1,226
5,351
7,410 8,288 2,071 3,270 3,154 2,714 3,025
(136)
(83)
(1,086)
(93)
(181) 1,279
(729)
(47)
(54)
(20)
4,968 1,143
4,265
7,317 8,107 3,350 2,541 3,107 2,660 3,005
(2,234) (97)
(650) (3,823) (3,986) (2,989) (1,487) (1,075) (2,009) (2,665)
91%
7.5x
7.1x
1.4x
1.6x
100
11%
9.3%
4.8%
92%
91%
7.8x
7.6x
1.4x
1.6x
121
12%
9.1%
10.4%
94%
90%
7.9x
7.5x
1.4x
1.7x
96
14%
9.2%
8.1%
87%
91%
6.1x
6.1x
1.7x
2.0x
72
26%
9.8%
7.1%
79%
91%
5.6x
5.6x
2.0x
2.5x
77
29%
9.1%
5.8%
77%
92%
6.1x
6.0x
2.6x
2.9x
49
11%
6.3%
10.3%
88%
94%
6.3x
6.3x
2.6x
3.0x
50
17%
6.2%
8.8%
86%
92%
6.7x
6.5x
2.4x
2.9x
45
21%
6.2%
7.3%
85%
93%
6.5x
6.5x
2.5x
3.1x
43
30%
6.2%
7.8%
81%
93%
6.2x
6.1x
2.6x
3.4x
36
35%
6.1%
8.1%
77%
FY21
FY22
FY23
JSW Hydro Energy RG1
FY24
1HFY25
LTM
FY21
FY22
FY23
FY24
FY25
6,196
6,195
5,365
6,172
(3,389)
(3,085)
(162)
37,648
34,195
3,453
6,687
2,952
8,144
2,593
(174)
2,419
(544)
AZUPOE 3.575% 2026
B1/-/995
1,010
N/A
6.1
5.9
N/A
INR m
6,330
6,086
6,023
6,104
6,001
5,941
5,305
5,147
5,199
6,064
6,022
6,157
(2,810) (2,153) (2,426)
(3,971) (1,999) (1,888)
1,515
2,011
1,778
30,971 31,402 28,337
29,385 28,736 26,004
1,586
2,666
2,333
6,862
6,812
7,420
3,621
3,308
2,469
8,547
9,282
11,322
1,102
3,396
3,888
(161)
(82)
(24)
941
3,314
3,864
(183)
50
(598)
HBSPIN 4.125% 2031
Ba1/-/BB+
N/A
5,629 5,520 5,595 4,913 5,862
N/A
2.1
3.3
2.3
2.8
2.0
INR m
5,674 12,226 18,563 13,282 13,700 11,448
N/A
11,978 18,124 13,112 13,658 11,448
4,780 10,636 16,855 11,224 11,542 8,894
5,746 10,692 17,172 11,383 12,480 9,576
(2,293) (4,514) (5,020) (4,014) (3,578) (3,307)
(1,801) (4,727) (3,762) (4,217) (3,570) (3,183)
1,151
1,490 6,627 2,740 4,200 4,783
26,684 51,968 51,278 51,450 47,199 44,458
25,927 50,416 48,237 49,268 43,950 39,574
757
1,552 3,041 2,183 3,250 4,884
8,811
7,890 11,432 8,680
2,533
513
693
646
307
265
11,330 19,886 25,292 31,211 34,455 39,412
2,526
7,906 1,269 4,056 7,228 6,063
(54)
(1,546) (107)
(100)
(179)
(306)
2,472
6,360 1,162 3,956 7,049 5,757
152
(7,890) (3,542) 2,752
87%
7.0x
6.4x
1.6x
1.8x
174
18%
9.0%
8.2%
82%
84%
5.8x
5.5x
1.9x
2.2x
209
22%
9.1%
12.8%
78%
84%
5.6x
5.4x
2.1x
2.5x
163
33%
8.6%
6.7%
70%
1,014
6.1
85%
6.1x
5.6x
2.4x
2.8x
198
22%
6.9%
6.4%
77%
86%
5.5x
5.0x
2.1x
2.5x
150
26%
8.6%
6.7%
71%
87%
4.9x
4.7x
2.4x
2.4x
15
0%
8.7%
9.1%
72%
91%
3.0x
2.9x
3.4x
3.4x
14
0%
9.8%
7.3%
67%
84%
4.6x
4.4x
2.8x
2.8x
18
15%
7.8%
8.2%
62%
84%
4.1x
3.8x
3.2x
3.5x
8
24%
7.6%
7.6%
58%
78%
5.0x
4.4x
2.7x
2.9x
8
20%
7.4%
7.2%
53%
72
Appendix – Data and Chart Pack
Restricted Group Financials of Indian Renewables – Greenko and Continuum
Greenko Dutch 2026 RG1
Restricted Group (RG)
RG Bond
Ratings (M/S/F)
Power Generation (GWh)
Average Tariff (INR/kWh)
Financials
Total Revenues
Of which from: Power Supply
Operational EBITDA
Total EBITDA (incl LPS/interest income)
Adjusted Interest Expense
Cash Interest Expense
Net Income
Total Debt
Net Debt
Cash
Loans to Related Parties
Receivables
Equity
CFO
Capex & Investments
Free Cash Flow
Intercompany Loan Cash Movements
Ratios
Operational EBITDA Margin
Gross Debt/Operational EBITDA
Net Debt/Operational EBITDA
Operational EBITDA Interest Cover
Total EBITDA Interest Cover
Receivables Days
Loans to Related Parties / Total Debt
Average Funding Cost (Adjusted Interest)
Average Funding Cost (Cash Interest)
Debt/Capital
Source: Company Filings, Nomura
FY21
FY22
FY23
FY24
167
162
124
125
(132)
(129)
(75)
973
937
37
177
352
(39)
(6)
(45)
0
GRNKEN 3.85% 2026
Ba2/-/BB
2,720 2,727 2,812
4.5
4.4
4.5
USD m
170
155
156
163
149
153
131
119
114
132
127
121
(56)
(49)
(63)
(67)
(67)
(43)
4
22
(4)
975
926
860
955
899
816
21
28
44
205
144
102
331
262
259
19
101
88
(4)
(2)
(3)
14
99
85
(25)
(47)
1
74%
7.8x
7.6x
0.9x
1.0x
388
0%
13.5%
13.2%
73%
77%
7.5x
7.3x
2.3x
2.3x
440
0%
5.8%
6.9%
75%
2,645
4.5
77%
7.8x
7.5x
2.4x
2.6x
340
0%
5.3%
7.3%
78%
73%
7.6x
7.2x
1.8x
1.9x
239
0%
7.3%
5.0%
77%
153
151
116
131
(54)
(41)
8
844
791
54
116
287
68
(3)
64
(1)
Greenko Power II 2028 RG4
1HFY25
FY21 FY22
FY23
FY24
LTM
GRNKEN 4.3% 2028
Ba2/-/BB
1,787 3,235 3,473 4,645
4,012
4.6
4.5
4.5
4.6
4.5
USD m
113
212
204
269
226
110
196
194
258
218
98
178
163
218
181
100
181
170
243
212
(54)
(121)
(53)
(74)
(60)
(49)
(131)
(61)
(74)
(68)
(5)
(43)
27
56
47
1,007 1,096 1,196 1,038
980
938
1,020 1,126
921
884
69
76
70
117
95
147
192
138
83
114
645
622
643
687
728
34
16
154
211
158
(1)
(2)
(0)
(4)
(14)
33
14
154
207
144
22
10
(227)
0
(2)
76%
7.3x
6.8x
2.1x
2.4x
278
0%
6.4%
4.8%
75%
86%
10.3x
9.6x
1.8x
1.9x
477
0%
5.4%
4.8%
61%
1HFY25
LTM
2,754
4.6
84%
6.2x
5.7x
1.5x
1.5x
331
0%
11.1%
11.9%
64%
80%
7.3x
6.9x
3.1x
3.2x
246
0%
4.4%
5.1%
65%
81%
4.8x
4.2x
3.0x
3.3x
113
0%
7.1%
7.1%
60%
80%
5.4x
4.9x
3.0x
3.6x
184
0%
6.1%
6.9%
57%
Greenko Wind 2025 RG5
FY21
FY22
FY23
FY24
Continuum 2033 RG2
1HFY25
LTM
FY21
GRNKEN 7.25% 2028
Ba2/-/BB
N/A
N/A
N/A
N/A
N/A
N/A
USD m
(0)
(0)
(2)
(0)
(0)
1
(2)
(1)
(22)
(52)
(55)
(0)
(6)
(5)
443
742
1,095
273
555
873
170
187
223
98
189
296
(19)
(40)
(50)
(268)
(356)
(372)
(286)
(396)
(422)
140
0
74
N/A
N/A
1,353
5.4
(3)
3
(1)
(94)
(2)
1,350
1,048
301
296
(91)
(436)
(528)
107
N/A
N/A
N/A
N/A
-379.0x -1135.9x -1613.6x -504.7x
-123.1x -698.9x -1206.2x -402.1x
N/A
N/A
-0.2x
-2.0x
N/A
N/A
-0.2x
1.3x
N/A
N/A
N/A
N/A
0%
0%
0%
0%
0.0%
0.0%
0.3%
0.1%
0.0%
4.9%
7.0%
5.0%
100%
82%
80%
79%
N/A
-517.1x
-401.7x
-4.3x
5.6x
N/A
0%
0.0%
7.0%
82%
N/A
N/A
(1)
(1)
(1)
258
84
174
(1)
(4)
(28)
(32)
56
FY22
FY23
FY24
1HFY25
LTM
7,661
7,332
5,608
6,222
(5,773)
(6,729)
(1,108)
41,027
40,491
536
6,769
3,540
3,761
(3,265)
(603)
(3,868)
(2,959)
CGRNEG 7.5% 2033
Ba2/-/BB+
1,590 1,675 1,960
5.5
5.3
5.4
INR m
9,191 9,198 11,055
8,675 8,861 10,672
6,740 6,720 8,053
7,705 8,334 9,498
(5,625) (5,895) (7,245)
(3,770) (5,888) (5,186)
(32)
(84) (1,114)
49,225 57,689 57,715
43,545 52,358 53,610
5,680 5,331 4,105
6,592 5,330 7,740
4,494 2,160 1,508
4,515 5,051 3,313
2,401 3,998 3,777
(8,678) (5,003) (387)
(6,277) (1,005) 3,390
228
(306) (2,048)
10,548
10,220
7,458
8,743
(7,239)
(9,911)
13
62,147
55,000
7,147
7,674
1,895
2,573
(689)
(148)
(837)
(1,522)
73%
7.3x
7.2x
1.0x
1.1x
169
16%
14.1%
16.4%
92%
73%
7.3x
6.5x
1.2x
1.4x
178
13%
11.4%
7.7%
92%
71%
8.3x
7.4x
1.0x
1.2x
66
12%
11.6%
15.9%
96%
73%
8.6x
7.8x
1.1x
1.4x
86
9%
10.2%
10.2%
92%
73%
7.2x
6.7x
1.1x
1.3x
50
13%
12.6%
9.0%
95%
N/A
N/A
73
Appendix – Data and Chart Pack
Restricted Group Financials of Indian Renewables – ReNew and Others
ReNew 2027 RG1 (INGPHL)
Restricted Group (RG)
RG Bond
Ratings (M/S/F)
Power Generation (GWh)
Average Tariff (INR/kWh)
Financials
Total Revenues
Of which from: Power Supply
Operational EBITDA
Total EBITDA (incl LPS/interest income)
Adjusted Interest Expense
Cash Interest Expense
Net Income
Total Debt
Net Debt
Cash
Loans to Related Parties
Receivables
Equity
CFO
Capex & Investments
Free Cash Flow
Intercompany Loan Cash Movements
Ratios
Operational EBITDA Margin
Gross Debt/Operational EBITDA
Net Debt/Operational EBITDA
Operational EBITDA Interest Cover
Total EBITDA Interest Cover
Receivables Days
Loans to Related Parties / Total Debt
Average Funding Cost (Adjusted Interest)
Average Funding Cost (Cash Interest)
Debt/Capital
Source: Company Filings, Nomura
4,964
4,961
3,993
5,146
(4,265)
(4,666)
517
34,237
33,725
512
12,605
5,567
8,461
(1,271)
(17)
(1,288)
(1,228)
INGPHL 4% 2027
Ba3/-/BB938
959
1,009
5.4
5.6
5.4
INR m
5,146
5,438
5,457
5,102
5,351
5,430
4,147
4,256
4,376
5,775
5,822
6,174
(2,990) (3,620) (4,440)
(2,060) (2,324) (2,737)
941
535
99
35,089 40,251 40,670
33,916 38,368 39,711
1,173
1,883
959
12,152 17,494 20,754
6,931
3,989
3,052
9,401
9,936
10,035
1,691
2,612
7,556
(17)
(24)
(32)
1,674
2,588
7,524
(1,031) (5,341) (7,630)
RPVIN 4.5% 2028
Ba3/-/BB985
1,172 2,035 1,977 2,027
5.3
4.4
3.7
3.7
3.7
INR m
5,218
5,134 7,490 7,315 7,542
5,209
5,134 7,490 7,315 7,538
4,232
4,283 6,081 6,038 5,973
6,084
5,344 7,712 7,771 8,029
(4,170) (4,114) (3,563) (6,618) (3,553)
(3,011) (3,340) (3,266) (3,062) (2,495)
189
(504) 1,219 (1,641) 1,291
36,760 46,623 51,122 54,251 55,773
35,550 45,163 48,508 52,252 55,243
1,210
1,460 2,614 1,999
530
17,784 10,598 12,252 16,771 16,483
4,162
4,525 5,989 3,988 2,821
11,038 26,263 26,766 25,716 27,047
3,196
(268) 3,031 5,597 7,997
(34)
(5,002) (3,037) (303) (9,819)
3,162
(5,270)
(6)
5,294 (1,822)
4,297
(1,372) (2,206) (4,519) 288
6,888
6,888
5,210
7,215
(4,108)
(3,752)
857
52,756
51,043
1,713
12,777
2,939
28,568
2,939
(6,001)
(3,062)
7,757
ACME Solar/India Cleantech RG1
HFE/Clean Renewable RG1
3QFY25
1HFY25
FY22
FY23
FY24
FY21
FY22
FY23
FY24
LTM
LTM
ACMSOL 4.7% 2026
CLRNPW 4.25% 2027
Ba3/-/BBBa2/-/BB971
944
933
918
894
934
961
939
956
905
4.4
4.4
4.4
4.4
4.4
4.9
4.9
4.8
5.0
5.0
INR m
INR m
4,259
4,127
4,108
4,043
3,931
4,760 4,979 4,768
4,987
4,716
4,259
4,127
4,108
4,043
3,931
4,545 4,720 4,551
4,747
4,545
4,001
3,849
3,867
3,794
3,724
3,545 3,885 3,755
4,043
3,643
4,136
4,347
4,629
5,021
4,685
3,666 4,036 4,480
4,566
4,145
(2,196) (2,329) (2,377) (2,275) (1,620) (2,764) (2,358) (2,224) (2,094) (2,044)
(2,320) (2,846) (2,337) (2,234) (1,013) (3,735) (3,248) (2,047) (1,856) (1,683)
(120)
(907)
(53)
1,112
766
(944)
(278)
572
455
161
23,715 26,820 25,927 24,943 24,605 53,372 30,596 30,075 28,653 27,804
19,992 26,195 24,619 22,799 21,520 26,055 29,149 28,440 26,698 26,822
3,723
625
1,307
2,145
3,085 27,317 1,447 1,635
1,954
982
3,134
10,025 10,034 10,888 10,888
880
1,713 2,774
3,230
3,312
507
1,247
912
640
570
2,657 2,732 1,615
1,410
1,477
5,900
4,993
4,940
6,052
6,817
2,906 2,149 2,593
3,239
4,638
2,046
1,043
2,154
3,373
1,744
131
(1,036) 3,105
3,396
3,502
(43)
(36)
(109)
(162)
(157)
(81)
2,003
1,043
2,154
3,373
1,744
95
(1,144) 2,943
3,240
3,421
(360)
(6,845)
37
(958)
(833)
(750)
(456)
(422)
80%
8.6x
8.4x
0.9x
1.2x
409
37%
12.5%
13.6%
80%
81%
8.5x
8.2x
1.4x
1.9x
492
35%
8.5%
5.9%
79%
81%
8.7x
8.4x
1.0x
1.5x
291
48%
11.3%
8.2%
77%
76%
10.1x
9.8x
1.3x
1.8x
156
24%
7.8%
7.1%
65%
94%
5.9x
5.0x
1.8x
1.9x
43
13%
9.3%
9.8%
80%
FY21
912
5.4
FY22
FY23
78%
9.5x
9.0x
1.2x
1.6x
268
43%
9.0%
5.8%
80%
FY24
80%
9.3x
9.1x
1.0x
1.4x
204
51%
10.9%
6.7%
80%
ReNew 2028 RG4
1HFY25
LTM
FY21
83%
10.9x
10.5x
1.0x
1.3x
322
23%
8.8%
7.2%
64%
FY22
81%
8.4x
8.0x
1.7x
2.2x
292
24%
7.0%
6.4%
66%
FY23
83%
9.0x
8.7x
0.9x
1.2x
199
31%
12.2%
5.6%
68%
FY24
79%
9.3x
9.2x
1.7x
2.3x
137
30%
6.4%
4.5%
67%
1HFY25
LTM
2,245
3.1
FY21
93%
7.0x
6.8x
1.7x
1.9x
110
37%
8.7%
10.6%
84%
94%
6.7x
6.4x
1.6x
1.9x
81
39%
9.2%
9.0%
84%
94%
6.6x
6.0x
1.7x
2.2x
58
44%
9.1%
9.0%
80%
95%
6.6x
5.8x
2.3x
2.9x
53
44%
6.6%
4.1%
78%
74%
15.1x
7.3x
1.3x
1.3x
204
2%
5.2%
7.0%
95%
78%
7.9x
7.5x
1.6x
1.7x
200
6%
7.7%
10.6%
93%
79%
8.0x
7.6x
1.7x
2.0x
124
9%
7.4%
6.8%
92%
81%
7.1x
6.6x
1.9x
2.2x
103
11%
7.3%
6.5%
90%
77%
7.6x
7.4x
1.8x
2.0x
114
12%
7.4%
6.1%
86%
SAEL RG1
FY22
FY23
FY24
9MFY25*
(Not LTM)
3,806
3,806
2,219
2,235
(664)
(665)
(12)
10,416
10,249
168
490
2,400
133
(2,516)
(2,383)
-
SAELLT 7.8% 2031
-/-/BB+
N/A
N/A
N/A
N/A
INR m
4,504
5,278
4,504
5,252
2,212
2,602
2,246
2,659
(1,082) (1,306)
(1,088) (1,306)
(551)
(191)
16,092 16,678
11,975 15,576
4,118
1,101
1,181
1,427
659
906
2,349
3,168
1,963
1,565
(2,696) (5,679)
(733)
(4,114)
(1,181)
(431)
4,377
4,376
2,572
2,596
(1,398)
(570)
(758)
23,320
22,635
685
7,566
983
1,712
117
(1,085)
(968)
(6,139)
58%
4.7x
4.6x
3.3x
3.4x
47
0%
6.4%
6.4%
81%
49%
7.3x
5.4x
2.0x
2.1x
53
7%
6.7%
6.8%
87%
59%
N/A
N/A
N/A
N/A
N/A
32%
4%
250%
93%
N/A
N/A
49%
6.4x
6.0x
2.0x
2.0x
63
9%
7.8%
7.8%
84%
N/A
N/A
74
Appendix – Data and Chart Pack
Macau’s Total GGR and Visitations
Source: DSEC, DICJ, Nomura
75
Appendix – Data and Chart Pack
Macau’s Total GGR Recovery, Market Share for Total GGR, VIP GGR and Mass Table + Slot
Source: DSEC, DICJ, Nomura
76
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defined by the Financial Instruments and Exchange Act of Japan; (iv) in Australia by NIP, NSL, NIHK or Nomura Australia Ltd (ACN 003 032 513) (“NAL”) only to “wholesale clients”, as that term is defined in the Australian Corporations
Act 2001. NAL is regulated by the Australian Securities and Investment Commission and holds an Australian financial services (AFS) licence (No. 246412). Neither NIP, NSL nor NIHK holds an AFS licence as each is exempt from the
requirement to hold this licence in respect of the financial services it provides. NIP is authorised by the PRA and regulated by the FCA and PRA under UK laws, NSL is regulated by the MAS under Singapore laws, while NIHK is regulated
by the SFC under Hong Kong laws, all of which differ from Australian laws, all of which differ from Australian laws; (v) in Malaysia by Nomura Securities Malaysia Sdn Bhd; or (vi) in Korea by Nomura Financial Investment (Korea) Co., Ltd.
only for “professional investors” as defined by the Financial Investment Services and Capital Market Act. The material has not been reviewed by any regulatory authority in Hong Kong, Singapore, Australia or any other jurisdiction.
No part of the material may be (i) copied, photocopied, or duplicated in any form, by any means, or (ii) redistributed without our prior express consent. Further information on any of the securities mentioned herein may be obtained upon
request. If the publication has been distributed by electronic transmission, such as e-mail, then such transmission cannot be guaranteed to be secure or error-free as information could be intercepted, corrupted, lost, destroyed, arrive late
or incomplete, or contain viruses. The sender therefore does not accept liability for any errors or omissions in the contents of the material or any other damage that which may arise as a result of electronic transmission. If verification is
required, please request a hard-copy version of the material. NSL and Nomura Securities Singapore Pte. Ltd. (collectively the “Nomura SG Entities”), together with their foreign-related corporations (“Nomura FRCs”), deals with Singapore
domiciled clients through various cross border business arrangements which are subjected to the supervision of the Monetary Authority of Singapore. These representatives representing the Nomura FRCs in their dealings with
Singapore-domiciled clients are not licensed under, nor subjected to the MAS’ regulations. Should you have any questions or like to know more information on this cross border business arrangement, you may reach out to your
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respective sales representative(s). References herein to ‘Nomura' shall include Nomura Holdings, Inc. and its affiliates.