In the China property space, fundamentally weaker bonds have relatively steep5Y/10Y curves, while stronger credits have fairly flat spread curves.
For example, the BBB-rated GRNLGR bond trades at a bid Z-spread differential of c.83bps versus the BBB+ rated CHIOLI bond, which trades at a bid Z-spread differential of c.42bps.
Standard Chartered notes as follows on Friday:
We believe this is temporary and that curves of fundamentally weaker bonds will eventually flatten off as investors go down the credit curve in search of yield.
Commentary
Spread curves of fundamentally weaker China property bonds likely to flatten off
In the China property space, fundamentally weaker bonds have relatively steep5Y/10Y curves, while stronger credits have fairly flat spread curves. For example, the BBB-rated GRNLGR bond trades at a bid Z-spread different…
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