ATF indexes rise on industrial and bank gains 

Rally in Chinese credit market herald further spread tightening

ATF indexes rise on industrial and bank gains 
The ATF China Bond 50 Index and its four sub-gauges all rose on Tuesday, edging up by 0.01%.

(ATF) It was a quiet day for the ATF indices on Tuesday, with the benchmark China Bond Index, and the ATF ALLINDEX Corporates, Local Governments, Financial and Enterprise sub-gauges all inching up 0.01%.

Industrial and financial names led the gains in the index’s advances.

Within the China Bond 50 index, the bonds of Agricultural Development Bank of China rose 0.06% (for a yield decrease of 0.24%), while the ATF ALLINDEX Financial recorded price rises in the bonds of China Citic Bank (0.08% for a yield decrease of 0.85%) and Everbright Financial Leasing (0.01% for a yield decrease of 0.06%). The bonds each traded last on 26 October, 13 October and 23 October.

Meanwhile, Xi’An Hi-tech and Hangzhou Qianjiang New City recorded price increases of 0.02% and 0.01%, for yield declines of 0.05% and 0.07% respectively. The bonds each traded last on 23 October and 7 July.

The tone of China’s corporate credit market is improving, according to Jefferies Hong Kong in a research note. While at first unresponsive to the country’s improved economic data, Chinese credit markets have rallied and several factors herald a further tightening of spreads, it said.

These include a rebound in the property market and fiscal stimulus measures which have enabled a flourishing of working capital, as well as a resurgence in the demand for autos and housing and an absence of price deflation in both equities and property.

Finally, higher yields on Chinese sovereign paper have attracted large foreign inflows while a bottoming-out of producer prices suggests that corporate pricing power may soon return.

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