J.P. 摩根-亚太地区-投资策略-亚太投资公司：它们是“贸易战”的证据吗？-2019.2-25页.pdf

S T R I C T L Y P R I V A T E A N D C O N F I D E N T I A LAsia Investment Grade CorporatesAre They“Trade War”Proof?Varun Ahuja,CFA AC (852)2800 6038 Tiantian Teng(852)2800 7024 Asia Credit ResearchAsia Pacific Credit ResearchFebruary 2019See end pages for analyst certification and important disclosures.J.P.Morgan does and seeks to do business with companies covered in its research reports.As a result,investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report.Investors should consider this report as a single factor in making their investment decision.1Executive SummaryAsia IG Corporates registered positive returns year to date,helped by credit spread tightening as well as lower UST yields Strong start to the year with year to date total returns at 2.2%,which is attributed to 24bps in spread compression and also slight tightening in USTs.By ratings,BBB-rated corporates reversed the underperformance seen last year,tightening 30bps in the year so far,outperforming single-A rated corporates which have tightened only 12bps.This is broadly in line with our view where we had a slight preference for BBB-rated corporates for this year.What has been a bit surprising though is the material outperformance of Indian corporates(although in line with China BBB credits,which had been our preferred segment as mentioned in the year ahead 2019 outlook).By duration,belly of the Asian IG corporates outperformed with 43bps in spreads tightening followed 24-26bps tightening in the long end.The front end of the IG curve has underperformed so far this year in this rally.Looking ahead,we maintain a slight preference for the belly and shorter than 5yr duration bonds looking at our UST rates outlook and also the somewhat spreads curve.Fundamentals continue to strengthen with solid improvement trend sustained since 2015.Blended net debt to EBITDA has declined to 1.2x from over 2.0 x in 2015,EBITDA margins are at post-GFC highs and interest coverage is a strong 8-9x.Liquidity has been exceptionally strong as well with cash more than covering short term debt on a blended basis.We also see some improvement in China SOEs fundamentals as government focus on SOE deleveraging plays out but LGFVs remain a bit of a concern although trading levels suggest we could enter selectively enter some better quality credits.Focus on BBB corporates globally is warranted but in Asia,in Asia,we would closely monitor the China LGFVs and property sectors in this ratings bucket.Outside of these,the bucket has mostly quasi-sovereigns which we think should see limited fallen-angel risk as macro-fundamentals for most BBB economies still quite robust such as Indonesia,India and Philippines.Trade war“proof”?Asian IG corporates have got off to a strong start including credits from China which is at the epicenter of the trade-war concerns.In our view,the direct impact should be very limited as also noted by our sovereign analysts.Sector wise,we think the direct impact is more on the China tech hardware sector but as we discuss in this presentation,that should also be manageable given bulk of revenues for the affected names still comes from outside US.We are however more concerned about the second order effect as a heightened trade war scenario would nonetheless impact Chinas domestic growth and currency strength,thereby threatening competitive devaluation of Asian currencies as well.Sector wise,we think China property,LGFVs,could be affected from this more than others.We do see some impact on trading names whose business model relies on sourcing from China for US companies.While they are trying to diversify away from just China-based sourcing,we think it takes time to meaningfully complete this transition.Current recommendationsWe continue to favor China BBB over single-A as the former is mostly represented by China SOEs,many of which are strategic in our view.We have tactically increased exposure in China LGFVs by adding to the“preferred”and“some comfort”names as detailed later in this presentation.Maintain our liking for the high step-up perps for high yielding IG carry.Bit surprising for the large issuances coming from China SOE space.Also,we took profit and upgraded the UWs in FFLs such as from CK Asset,CK Infra,Sun Hung Kai etc.recently,as their spreads are now wider than even 30yr bonds.The extent of rally in Indian IG corps has surprised us,but we think it makes sense to take exposure in defensive pvt sector names like Reliance Industries or wider names like Adani Ports,Bharti 24s etc.at this point,which should be less affected by macro headlines around the elections in 2Q19.Note:All charts have data as of Feb 14,2019 close unless stated otherwise.2Asia IG corporatesNote:Data as of Feb 19,2019;Source:Bloomberg,Moodys,S&P,Fitch,J.P.MorganTotal return,%Z-spread,bpYTW,%DurationSpreadUSTIndex (all calculations to worst)YTD2017CurrentYTD chg2017CurrentCurrentReturnReturnJACI2.6%-0.8%210-38874.8%4.382.0%0.6%JACI IG2.0%0.0%154-24534.2%4.751.5%0.6%JACI Corporate(exfin)3.1%-1.8%141-26364.1%8.152.3%0.8%JACI Corporate(exfin)IG2.0%0.3%156-23584.2%4.711.4%0.6%JACI Corporate(exfin)A1 above3.3%-2.0%281-561335.5%4.302.7%0.5%JACI Corporate(exfin)Single A2.4%-0.8%164-26634.3%5.251.7%0.6%JACI Corporate(exfin)BBB1.9%-0.1%130-17344.0%5.781.3%0.6%JACI Corp IG(exfin)1-3 years2.0%-0.2%133-18364.0%5.901.4%0.6%JACI Corp IG(exfin)3-5 years2.3%-0.6%187-33744.5%4.121.8%0.5%JACI Corp IG(exfin)5-7 years0.9%2.1%128-12603.9%1.810.5%0.4%JACI Corp IG(exfin)7-10 years1.5%0.8%132-17613.9%3.441.0%0.5%JACI Corp IG(exfin)10 years2.9%-0.9%152-45944.1%5.002.2%0.7%JACI Corporate(exfin)HY3.2%-2.6%165-28714.3%7.022.3%0.8%Global comparablesCEMBI Broad IG2.4%-0.5%187-30594.5%4.982.0%0.5%CEMBI Broad Asia IG2.0%-0.1%161-27624.2%4.411.6%0.4%CEMBI Broad Latin IG3.3%-2.0%234-33735.0%6.642.7%0.5%CEMBI Broad Europe IG2.1%-1.0%233-271125.0%4.451.7%0.4%EMBIG IG3.3%-2.8%206-41724.8%7.522.8%0.5%JULI-ex EM Corporate2.7%-2.7%160-22564.3%7.99JULI-ex EM Corporate BBB2.8%-2.7%192-26644.6%7.67Strong start to the year in line with US and CEMBI Broad in spread terms0.0%0.5%1.0%1.5%2.0%2.5%3.0%3.5%4.0%4.5%5.0%JACIJACI IGJACI Sov IGJACI Quasi-sovIGJACI CorpJACI Corp IGJACI Corp A1aboveJACI CorpSingle AJACI Corp BBBJACI Corp IG 1-3 yrJACI Corp IG 3-5 yrJACI Corp IG 5-7 yrJACI Corp IG 7-10 yrJACI Corp IG 10 yrJACI Corp HYCEMBI BroadIGCEMBI Br AsiaIGCEMBI Br LatinIGCEMBI BrEurope IGEMBIG IGUST ReturnSpread Return3Asia IG corporatesAsia IG should perform in line with US on spreads;BBB still looks bit interestingAsia IG Corp vs JULI ex financialsJACI single-A vs.JACI BBB CorpsIndexAvgRating Z-sprd(bp)YTM(%)DurationAsia IG Corp(ex-fin)A3/A-1644.325.25US IG Corp(ex-fin)A3/A-1604.317.99Asia A Corp(ex-fin)A2/A1334.025.90Asia BBB Corp(ex-fin)Baa2/BBB1874.514.12US BBB Corp(ex-fin)Baa2/BBB1924.637.67Z-spread basisAsia IG vs US IGAsia BBB vs US BBBCurrent5-5YTD basis change33LTM average149LTM Basis High(bp)2727LTM Basis Low(bp)0-8Average since 20131214Note:Data as of Feb 19,2019;Source:Bloomberg,Moodys,S&P,Fitch,J.P.Morgan-60-40-2002040608050100150200250300Jan-13Apr-13Jul-13Oct-13Jan-14Apr-14Jul-14Oct-14Jan-15Apr-15Jul-15Oct-15Jan-16Apr-16Jul-16Oct-16Jan-17Apr-17Jul-17Oct-17Jan-18Apr-18Jul-18Oct-18Jan-19Asia IG vs US IGAsia IG CorpUS IG02040608010012014050100150200250300Jan-13Apr-13Jul-13Oct-13Jan-14Apr-14Jul-14Oct-14Jan-15Apr-15Jul-15Oct-15Jan-16Apr-16Jul-16Oct-16Jan-17Apr-17Jul-17Oct-17Jan-18Apr-18Jul-18Oct-18Jan-19BasisJACI Corp A-ratedJACI Corp BBB-rated4Asia IG corporates Back to A3/A-on average ratingSource:J.P.Morgan Composition of CEMBI Broad Asia IG vs.rest of EM by sector commodity exposure mostly at quasi-sov levelComposition of CEMBI Broad by ratings Single A&above rated corps still about half of overall in Asia IGTMT19.4%Utilities15.5%Infrastructure7.1%Oil&Gas23.3%Metals&Mining1.6%Consumer5.0%Industrial4.8%Real Estate17.0%Transport0.6%Diversified5.7%CEMBI Broad AsiaAA5.6%A+24.5%A12.0%A-12.0%BBB+21.7%BBB10.7%BBB-13.5%CEMBI Broad AsiaReal Estate4.0%Infrastructure7.2%Oil&Gas37.3%Utilities17.5%TMT9.9%Industrial15.0%Diversified1.9%Metals&Mining7.3%CEMBI Broad CEEMEAAA0.6%A+3.8%A19.6%A-10.8%BBB+11.2%BBB14.3%BBB-39.7%CEMBI Broad CEEMEAIndustrial14.3%Pulp&Paper8.4%Metals&Mining19.9%Consumer15.1%Utilities14.7%TMT15.7%Oil&Gas8.4%Real Estate2.3%Transport1.2%CEMBI Broad LATAMA1.6%A-10.4%BBB+19.2%BBB15.7%BBB-53.1%CEMBI Broad LATAM5050100150200250300350400JACI A&aboveJACI BBBJACI HYAsia IG corporates How has BBB grownSource:J.P.Morgan JACI BBB grown strongly;but not blended JACITotal outstanding of BBBs vs.single-AsJACI BBB spread multiple has elevated mostly in times of macro concernsJACI BBB has grown from 19%of JACI IG in 2009 to almost 43%by Dec-18Indo/PH upgrades231181972767952353451183796090100200300400500600700200920142018TotalA-rated&aboveBBB(Quasi-Sov)BBB(Corp+Fin)6Asia IG corporates Whats in my BBBSource:J.P.Morgan Rising stars(49)pip fallen angels(41)due to quasi-sovsComposition of JACI BBB Corporates BBB sectorMkt capAs%of BBBEIR DurationYield to WorstZ Spread to WorstConsumer8.895%5.124.59198Diversified1.481%2.875.12250Industrial9.996%2.664.19158Infrastructure8.165%3.664.19158Metals&Mining3.732%2.333.90130Oil&Gas20.6512%5.994.12148Quasi-sov71.0841%5.134.78214Real Estate27.2116%4.414.80220TMT7.624%4.434.37177Utilities14.378%6.334.82217Overview,composition and outlook for BBB corporatesChina,India,Thailand and Real-Estate(China predominantly)and oil&gas are the key key components of Asian BBB corporates currently.Quasi-sov:China LGFVs are the key variables here where we think we could see more fallen angels.Already seen some.China SOE quasi-sovs are actually mostly strategic names where fallen angel risk has been rather low.Outside of China,BBB quasi-sovs are from Indonesia(PLN,Pertamina,PBIIJ),India(INRC),where again,macros would dominate ratings moves.Real Estate China property segment has some border-line credits.Other segments have low overall representation and we think the risk of fallen angel names there are rather low.In fact,historically,we note that fallen angel risk is more idiosyncratic(Golden Eagle,Bharti Airtel,Dalian Wanda,Noble Group)rather than sector-wide.China Property and LGFVs though,are the key sectors to monitor,for us.Credit fundamentals of BBBs have deteriorated over the yearsIndian BanksID upgradeKR,CN corpsCN LGFVs7Asia IG corporatesYield differential or lack of it-Narrowed significantly over 2017-18 but some reversals seen recentlyNote:For 1-3yr,we use 3-m libor as the low base for the calculationsSource:J.P.Morgan,Bond Radar,Bloomberg,Moodys,S&P,Fitch Ratings,Asian IG YTW basis by duration bucketAsian IG corps return sensitivity to rates:5yr and under bonds offer better valueUST chgReturn(%)on spreads moving byz-sprdYTM,%Dureffect-60-40-200204060JACI223 4.76%4.62-0.41%5.0%4.1%3.1%2.2%1.3%0.4%-0.6%JACI Corp(exfin)IG175 4.32%5.27-0.40%4.8%3.7%2.7%1.6%0.6%-0.5%-1.5%JACI Corp A1 above139 3.99%5.76-0.38%4.7%3.5%2.4%1.2%0.1%-1.1%-2.2%JACI Corp Single A142 4.02%5.87-0.37%4.8%3.6%2.5%1.3%0.1%-1.1%-2.2%JACI Corp BBB217 4.71%4.78-0.42%4.9%4.0%3.0%2.1%1.1%0.2%-0.8%JACI Corp IG 1-3 yr140 3.90%1.87-0.43%3.7%3.3%2.9%2.6%2.2%1.8%1.4%JACI Corp IG 3-5 yr141 3.89%3.52-0.54%3.6%2.9%2.2%1.5%0.8%0.1%-0.6%JACI Corp IG 5-7 yr158 4.10%5.00-0.52%3.9%2.9%1.9%0.9%-0.1%-1.1%-2.1%JACI Corp IG 7-10 yr169 4.29%7.00-0.39%5.2%3.8%2.4%1.0%-0.4%-1.8%-3.2%JACI Corp IG 10 yr188 4.71%10.70-0.22%8.1%6.0%3.8%1.7%-0.4%-2.6%-4.7%-100-50050100150200250Jan-13Mar-13May-13Jul-13Sep-13Nov-13Jan-14Mar-14May-14Jul-14Sep-14Nov-14Jan-15Mar-15May-15Jul-15Sep-15Nov-15Jan-16Mar-16May-16Jul-16Sep-16Nov-16Jan-17Mar-17May-17Jul-17Sep-17Nov-17Jan-18Mar-18May-18Jul-18Sep-18Nov-185-7yr vs 1-3yr basis3-5yr vs 7-10yr basis7-10yr vs 10-30yr basis8Asia IG corporatesImprovement in bottom-up fundamentals continueNote:Sample of companies as presented in Asia Credit Analytics report published on November 5,2018.Source:J.P.Morgan estimates,Bloomberg.EBITDA margins still in improving trendWhile liquidity remains very strongLeverage under 1.5x,near historical lows implying interest expense cushion remains high15.5%13.9%12.6%12.5%12.6%14.1%15.4%15.4%15.5%12.0%13.0%14.0%15.0%16.0%17.0%201020112012201320142015201620171H2018EBITDA margin1.2x1.4x1.6x1.8x1.8x1.8x1.7x1.6x1.2x1.1x1.2x1.3x1.4x1.5x1.6x1.7x1.8x1.9x201020112012201320142015201620171H2018Net Debt/EBITDA98%80%81%73%82%118%123%115%145%70%80%90%100%110%120%130%140%150%201020112012201320142015201620171H2018Cash/ST debt12.6x11.6x9.5x8.7x8.4x8.0 x8.1x8.9x10.5x7.0 x8.0 x9.0 x10.0 x11.0 x12.0 x13.0 x201020112012201320142015201620171H2018EBITDA/Int exp9Asia IG corporatesTechnicals continue to be strong especially from regional investorsSource for all:J.P.Morgan,Bond Radar,Bloomberg,Moodys,S&P,Fitch Ratings,Company reports.Net supply needs in 2019 are marginal except for ChinaNew Issuance breakdown by sector and ratingAllocation of IG new issues by region Asia dominates at above 70%171.375554885867-6-10-13-21-29-32-15-17-14-42-30-4353.928.821.422.925.9-68.2-100-80-60-40-20020406080100201420152016201720182019YTDMaturityCouponGross supplyNet financing10Asia IG corporatesOffshore yields should look appealing to onshore investors and supply remains very mutedSource for all:J.P.Morgan,WIND,Bond Radar,Bloomberg,Moodys,S&P,Fitch Ratings.Supply from China IG corps including quasi-sov(US$bn)Onshore yields before and after swapChina onshore AAA bonds offer lower yields again,last seen in 2015 a strong technical tailwind-0.090.080.220.342.592.722.812.912.682.642.592.57-0.50.51.52.53.51YR2YR3YR5YRYield pick-up(CCS-IR Swap)CNH/USD CCSIR swap2.53.03.54.04.55.05.56.06.57.0Feb-14Aug-14Feb-15Aug-15Feb-16Aug-16Feb-17Aug-17Feb-18Aug-18Feb-19China corporate bond AAA 5-year ytmJACI China IG ytw46.4 30.8 28.2 52.4 54.3 0.8 45.0 44.0 26.0 18.6 30.2 29.4(1.3)12.0(10)0102030405060201420152016201720182019YTD2019EGross supplyNet supply11China LGFVTactically positive on the space for 1H19 at least,on higher expected government supportSource for all:J.P.Morgan,WIND,Bloomberg,Moodys,S&P,Fitch Ratings,Company reports.China LGFV relative value vs.China IG and HYSector strategy and recommendationsMost LGFVs are trading as a“group”in different yield buckets,Take selective exposure in preferred/some comfort namesGiven recent relaxation in government policy,we think the space could outperform in 1H19 and hence we recommend increasing exposure to this space tactically,mostly in short dated names.Curve should be steeper than SOEsSince short dated,exposure likely for low-beta hold to maturity tradeBut info opacity means spreads“jump-risk”is highAlternatives for the uncertain categoryLGFVs with strong policy role low beta but low yieldBeijing Infra,Wuhan Metro,Guangzhou MetroAlternatives in the 4-6%yield bucket in 2019-22 duration bucketZijin Mining 21s,State Power Inv perps c22sChemChina 3.9%perps,PowerChina perpsAlternatives in the higher yielding buckets-not without risk but monitoring risk should be easier