China Banks: The big four China banks i.e. Industrial & Commercial Bank of China (ICBC), Bank of

China Banks: The big four China banks i.e. Industrial & Commercial Bank of China (ICBC), Bank of China (BOC), China Construction Bank (CCB) and Agricultural Bank of China (ABC) reported FY2016 results last week. Net interest income of the banks slowed for a fifth consecutive quarter due to margin compression post rate cuts. However, the banks kept in profit growth due to better cost-to-income ratios, with the exception of BOC. Overall asset quality was stable. We see bond valuations as tight for the perceived additional credit and corporate governance risk compared to other countries. Among China bank capital securities, we prefer CCB’s AT1 4.65% perp NC 2020 (USD).

PTT Public Company Limited (PTT): PTT recently completed a bond buyback exercise on the 2042 and 2035 USD bonds. It is uncertain how much liquidity there will be after the buyback. Thai oil companies have followed the broader rally in Asian oil and gas companies. PTT spreads trade near historical lows, but we see PTTB 5.875% 2035 (USD) bonds (z+200bps) still trading reasonably attractive as the curve is quite steep compared to Petronas.