Probably not. But for now, that does not matter. Everybody wants a piece of the rally. BofA has more.
Where we are now: valuation
As the recent easing measures show change of policy stance in the property sector, the China HY property spread tightened 2,035bp WoW to 4,469bp. The current spread implies a breakeven default rate of 64% in China HY property, assuming 70% loss on default. For the defaulted HY developers, we see average WoW change of 1.5 and 24.7% in absolute amount and percent, respectively (Exhibit 9). In the rest of the HY space, we see the same trend. China HY non-property tightened 97bp WoW to 682bp, Asia excluding China HY tightened 108bp WoW to 766bp, and US HY tightened 28bp WoW to 471bp. Asia IG also tightened, with China IG property tightening 178bp WoW to 458bp, China IG non-property -11bp WoW to 192bp, and Asia ex-China IG 8bp WoW to 188bp. Meanwhile, US IG tightened 12bp WoW to 148bp.
