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China CITIC Financial Asset Management (Huarong)
- Sector: Financial Services
- Sub Sector: Banks
- Region: China
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Fundamental View
AS OF 08 Apr 2025A large impairment loss in FY20 brought CITIC AMC (formerly Huarong) to the brink of insolvency, but a state-led rescue plan provided it with liquidity support and brought its capital back above minimum requirements. CITIC has replaced the MoF as its largest shareholder. CITIC AMC remains as one of the Big 5 state-owned AMCs in China and will continue to perform national services.
On the guidance of the authorities, CITIC AMC has divested almost all of its non-core subsidiaries.
We expect its core operations to remain weak and volatile, until China’s economy is back on the upswing, residents regain confidence in the property market, and improved capital markets lead to better valuations on its securities books.
Business Description
AS OF 08 Apr 2025- China CITIC Financial Asset Management (formerly Huarong) is one of the five major state-owned asset management companies in China. It was first set up in 1999 to take over the bad debts of ICBC.
- The AMCs were originally due to be wound up after dealing with these "policy loans" that had come onto the books of the banks under government direction before their commercialisation, but the AMCs found a new role as commercial bad debt managers.
- CITIC AMC was commercialised in 2012 and completed its IPO on the HK stock exchange in 2015. Since then, it expanded its financial services to banking, financial leasing, securities & futures, trust, as well as consumer finance. However, after heavy losses in FY20, the company has divested almost all of its non-core business as directed by the authorities.
- Following the CITIC-led rescue plan and the equity transfer from the Ministry of Finance (MOF) to CITIC, CITIC has become its largest shareholder (26.46%). Other significant shareholders include MOF (24.76%), Zhongbaorongxin (18.08%), Cinda AMC (4.89%), China Life Insurance (4.50%), National Social Security Fund (3.08%), Warburg Pincus (2.57%), and ICBC Financial AM (2.44%). It was renamed to share the "CITIC" brand in Nov-23.
Risk & Catalysts
AS OF 08 Apr 2025CITIC’s support is strong (name change, investment in CEB and CITIC Ltd, subsidiary disposal, new management team, etc.) and more meaningful to the company compared to direct ownership by the government.
Derisking continues with lower property exposure, non-core businesses have largely been disposed of and the company is able to focus on its main DDA business per the guidance of the authorities.
While the company was able to deliver profit growth on the back of CITIC support and its associate interest holdings, core performance remains weak, and there could be continued volatility in the name.
AMCs may find it harder to dispose DDAs at good valuations amid a deceleration economic cycle. Longer holding periods and lower fair values of acquired DDAs could dampen return yields and increase the NPL ratio of restructuring-type DDAs.
Key Metric
AS OF 08 Apr 2025| CNY mn | FY20 | FY21 | FY22 | FY23 | FY24 |
|---|---|---|---|---|---|
| ROA | (6.40%) | 0.10% | (2.20%) | 0.02% | 0.75% |
| ROE | (147.6%) | 1.0% | (49.8%) | 3.6% | 18.4% |
| Total Capital Ratio | 4.2% | 13.0% | 15.1% | 15.1% | 15.7% |
| Leverage Ratio | 1,330.0x | 14.2x | 16.1x | 11.5x | 10.1x |
| Equity/Assets | 1.1% | 3.8% | 5.2% | 5.0% | 5.7% |
CreditSight View Comment
AS OF 14 Jul 2025CITIC AMC continued to post profits in FY24, largely helped by investments in CEB, BOC and CITIC Ltd. Core businesses remained weak and volatile, as the company continues to lower valuations on existing DDAs acquired many years ago. Its non-DDA financial assets also have a more volatile performance than peers. CITIC’s support is strong, derisking continues with a meaningful improvement in the provision coverage ratio, non-core businesses have all been cleared, and the company is able to focus on main DDA business per the authorities’ guidance. However, we expect to continue to see high earnings volatility and poor disclosure. We expect it to trade 30-40 bp wider than CCAMCL.
Recommendation Reviewed: July 14, 2025
Recommendation Changed: July 14, 2025
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Fundamental View
AS OF 07 Apr 2025Petronas’ FY24 credit metrics remained resilient even as EBITDA fell as we had expected.
Despite the lower YoY outlook for O&G price realizations in FY25, we expect Petronas’ credit profile to remain resilient in FY25 and maintain its net cash position, aided by resilient domestic demand and still-positive FCFs.
We take comfort in Petronas’ strong support from the Government of Malaysia, given it is strategically vested with Malaysia’s entire oil & gas resources and provides a substantial source of government income.
Sizable O&G and renewable capex and high dividend payouts could restrain improvements in Petronas’ credit metrics and free cash flows.
Business Description
AS OF 07 Apr 2025- Petronas is an integrated oil and gas company, wholly owned and controlled by the Government of Malaysia.
- Its activities span the entire up/mid/downstream value chain both domestically and internationally. Key products and services provided include the sale and marketing of petroleum products, crude oil and condensates, LNG, natural and processed gas, petrochemicals, shipping services, property development and automotive engineering.
- Petronas carries out its exploration, development and production activities via production sharing contracts (“PSCs”), mostly with international O&G companies and Petronas' wholly-owned subsidiaries.
- Its Downstream segment is aimed at refining, supplying, trading, manufacturing and marketing of crude oil, petroleum products, and petrochemical products. Its key projects and factories include Pengerang Integrated Complex (PIC), Sabah Ammonia Urea in Sabah, and Integrated Aroma Ingredients Complex in Gebeng, Kuantan.
- Its Gas and New Energy division was set up in FY19 and groups all of Petronas' LNG, gas and renewable revenues into a single segment. Activities within this division include production of LNG, processing and transportation of gas and solar power production.
- Its 6 listed subsidiaries include MISC Berhad (57.56%), KLCC Property (75.46%), Petronas Chemicals Group Berhad (64.35%), Petronas Gas Berhad (51%), Petronas Dagangan Berhad (63.94%), and Bintulu Port Holdings Berhad (28.52%).
Risk & Catalysts
AS OF 07 Apr 2025Broad growth slowdown concerns could hamper sales of Petronas’ Downstream (petroleum products) and Gas & New Energy (LNG and natural gas) segments.
Prolonged periods of low crude oil prices could harm upstream O&G EBITDA (which typically contributes 50%-70% of total profit after tax), albeit mitigated partly by stronger downstream O&G EBITDA.
Sizable capex on domestic O&G and renewable energy ventures could restrain improvements in Petronas’ credit metrics and free cash flows.
Petronas is regularly required to pay dividends to the Government of Malaysia, which may weigh on its cash flows.
We remain watchful of how the dispute between Petronas and Sarawak state government unfolds, its impact on Petronas’ financials and its market position in the Malaysian O&G sector.
Key Metric
AS OF 07 Apr 2025| MYR mn | FY20 | FY21 | FY22 | FY23 | FY24 |
|---|---|---|---|---|---|
| Debt to Book Cap | 18.8% | 21.1% | 18.4% | 18.2% | 18.0% |
| Net Debt to Book Cap | n/m | n/m | n/m | n/m | n/m |
| Debt/Total Equity | 23.2% | 26.7% | 22.6% | 22.2% | 21.9% |
| Debt/Total Assets | 15.4% | 17.0% | 14.7% | 14.4% | 14.5% |
| Gross Leverage | 1.4x | 1.1x | 0.6x | 0.8x | 0.9x |
| Net Leverage | n/m | n/m | n/m | n/m | n/m |
| Interest Coverage | 15.0x | 20.9x | 33.9x | 24.9x | 21.8x |
| EBITDA Margin | 34.7% | 45.2% | 50.7% | 44.8% | 42.0% |
CreditSight View Comment
AS OF 07 Apr 2025We maintain our M/P rec on Petronas and prefer its existing 2026-2032 and the newly priced 2031. We compare Petronas to Pertamina and think its longer-dateds trade within our fair value range against Pertamina’s longer-dateds. On the other hand, the spread differential between Petronas’ and Pertamina’s shorter-dated have narrowed since Aug-2024, and we see some scope for Petronas’ shorter-dated to tighten. We like Petronas’s larger EBITDA, net cash position, more regular financial reporting than Pertamina and Malaysia’s relative policy stability. With the Petronas vs Sarawak state dispute nearing a resolution, we are more comfortable with the credit though we remain watchful of any negative development should Sarawak further contest the reported agreement.
Recommendation Reviewed: April 07, 2025
Recommendation Changed: September 07, 2020
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Search topics about wealth insights and investments.Commonwealth Bank of Australia
- Sector: Financial Services
- Sub Sector: Banks
- Region: Australia
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Fundamental View
AS OF 28 Mar 2025CBA has a very strong franchise in Australia; it is the leader in the retail market and is making good progress in challenging NAB in business banking.
It has been the best managed of the Australian banks for many years, and has outperformed peers. It lost some of its luster in the latter part of the 2010s due to regulatory and compliance lapses amid charges of complacency, but has since improved into a better institution.
Its capital and liquidity position is robust, while asset quality is strong.
Business Description
AS OF 28 Mar 2025- Originally established by the Australian government in 1911, CBA functioned for some time as Australia's central bank until the establishment of the Reserve Bank of Australia in 1959. It remained under government ownership until the early 1990s, after which it underwent a transformation from a bureaucratic public sector bank into a widely respected commercial organisation.
- Over the past twenty years, CBA has consolidated its position as the leading bank in Australia with a 24-28% share in household deposits and lending, helped by its acquisition during the 2008 crisis of Bank of Western Australia.
- In New Zealand it owns ASB Bank, but otherwise has been selling non-core assets, including its life insurance business.
Risk & Catalysts
AS OF 28 Mar 2025CBA’s financial health is closely linked to the Australian economy, in particular retail credit quality, mainly housing loans.
Earnings/NIMs are under pressure from strong mortgage market and deposit competition. Business banking growth however has been stellar and highly profitable.
Losses on housing loans have been minimal; the low stock on the housing market has led to home prices rising from Mar-23 onwards, contrary to expectations. Low rental vacancy rates (1%) and low unemployment rates (~4%) have been very supportive of asset quality. House prices are currently going through a soggy patch, but we are not concerned.
Key Metric
AS OF 28 Mar 2025| AUD mn | Y21 | Y22 | Y23 | Y24 | 1H25 |
|---|---|---|---|---|---|
| Return on Equity | 11.7% | 12.7% | 14.0% | 13.6% | 13.8% |
| Total Revenues Margin | 2.3% | 2.1% | 2.2% | 2.2% | 1.1% |
| Cost/Income | 47.0% | 46.3% | 43.7% | 45.0% | 45.2% |
| APRA CET1 Ratio | 13.1% | 11.5% | 12.2% | 12.3% | 12.2% |
| International CET1 Ratio | 19.4% | 18.6% | 19.1% | 19.1% | 18.8% |
| APRA Leverage Ratio | 6.0% | 5.2% | 5.1% | 5.0% | 4.9% |
| Impairment Charge/Avg Loans | 0.1% | (0.0%) | 0.1% | 0.1% | 0.0% |
| Gross Impaired Loans/Total Loans | 0.4% | 0.3% | 0.4% | 0.4% | 0.5% |
| Liquidity Coverage Ratio | 129% | 130% | 131% | 136% | 127% |
| Net Stable Funding Ratio | 129% | 130% | 124% | 116% | 116% |
CreditSight View Comment
AS OF 14 May 2025CBA operates as a well-oiled machine in the Australian banking market. It has the leading position in mortgages and deposits, and is challenging NAB in business banking. An AUSTRAC penalty in 2018 damaged its reputation and remediation costs impacted earnings for a couple of years. The bank sold a number of its non-bank business and equity investments to simplify and focus on its core domestic businesses. Strong mortgage market and deposit competition had capped NIMs despite higher cash rates. Business banking growth has been stellar and highly profitable. Asset quality is comfortable. Its CET1 ratio though strong has declined to below ANZ’s. It is our preferred name amongst the Aussie banks. Its seniors are fair, and we prefer its shorter call and bullet Tier 2s, the NC29s and bullet 31s.
Recommendation Reviewed: May 14, 2025
Recommendation Changed: October 05, 2016
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Search topics about wealth insights and investments.Chile
- Bond: CHILE 3.125 26
- Indicative Yield-to-Maturity (YTM): 4.272%
- Credit Rating : A/A2/A-
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Country Overview
AS OF 28 Mar 2025- Chile is one of Latin America’s largest economies, ranking 46th globally in GDP, with an estimated USD 328.72 billion in 2024.
- It is classified as a developing, upper-middle-income, and emerging market economy, highlighting its progressive economic development and market accessibility.
- The mining sector is the primary driver of economic growth, with copper and carbonates as key exports, mainly to China, the US, and Japan.
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Fundamental View
AS OF 26 Mar 2025Absent the potential increase in leverage and complexities of integrating the business with Nissan, Honda management is returning its focus to increasing the production and sale of hybrid vehicles while accelerating investments in electric vehicles to potentially catch up to competitors in China and other markets. The company’s plan to repurchase up to 24% of its outstanding shares in 2025 remains intact but should not adversely impact the company’s fortress balance sheet.
Business Description
AS OF 26 Mar 2025- Honda Motor Co., Ltd. engages in the manufacture and sale of automobiles, motorcycles, and power products. It operates through the following segments: Automobile, Motorcycle, Financial Services, and Power Product and Other Businesses. The Automobile segment manufactures and sells automobiles and related accessories. The Motorcycle segment handles all-terrain vehicles, motorcycle business, and related parts. The Financial Services segment provides financial and insurance services.
- American Honda Finance Corporation (AHFC) is a wholly-owned subsidiary of American Honda Motor Co., Inc. (AHM or the Parent). Honda Canada Finance Inc. (HCFI) is a majority-owned subsidiary of AHFC. Non-controlling interest in HCFI is held by Honda Canada Inc. (HCI), an affiliate of AHFC. AHM is a wholly-owned subsidiary and HCI is an indirect wholly-owned subsidiary of Honda Motor Co., Ltd. (HMC). Honda Motor Co. (HMC) maintains Keep Well (support) agreements with its North American finance subsidiaries, AHFC and HCFI. Under the Keep Well agreements, HMC agrees to (1) maintain at least 80% ownership in AHFC and HCFI, (2) ensure AHFC and HCFI maintain a positive net worth, and (3) ensure both AHFC and HCFI have sufficient liquidity to meet their debt payment obligations.
Risk & Catalysts
AS OF 26 Mar 2025Management raised its FY25 motorcycle wholesales forecast by 2% but lowered its automobile wholesales forecast for the third consecutive quarter, this time by as modest 1% after decreases of 3% and 5% the previous two quarters. Motorcycle wholesales are now projected to increase 9% YoY, driven by growth in Asia (+9%) – which is expected to account for 85% of total motorcycle wholesales – along with growth in all other regions. The company’s lower automobile wholesale forecast is driven by a downward revision in Japan and Europe, with the former related to the increasingly competitive environment in that country.
Management maintained its FY25 consolidated operating profit forecast but noted some underlying changes to the composition of the forecast. It expects FY25 profit to be reduced by lower automobile unit sales, lower price and higher cost revisions, and increased expenses, all of which are projected to be offset by a favorable currency impact. Consolidated operating profit margins of 6.6% in FY25 were revised lower by 20 bp and are also expected to be 20 bp lower on a YoY basis.
Key Metric
AS OF 26 Mar 2025| $ mn | FY21 | FY22 | FY23 | FY24 | F3Q25 |
|---|---|---|---|---|---|
| Total Company Earning Assets | 76,778 | 71,105 | 65,363 | 74,626 | 81,564 |
| Cash and Investments | 1,870 | 2,607 | 1,544 | 1,670 | 1,591 |
| Excess Liquidity | 8,870 | 9,607 | 8,544 | 8,670 | 8,591 |
| Unsecured Debt | 43,037 | 38,026 | 33,410 | 41,566 | 46,548 |
| Secured Debt | 8,890 | 8,888 | 6,927 | 9,351 | 11,007 |
| Total Debt | 51,927 | 46,914 | 40,337 | 50,917 | 57,555 |
| Allowance % Retail Rece. | 0.75% | 0.58% | 0.71% | 0.80% | 0.83% |
| Allowance / Net Charge-offs | 2.41x | 3.75x | 2.41x | 1.72x | 1.59x |
| Net Charge-offs % Avg. Receivable | 0.33% | 0.15% | 0.29% | 0.52% | 0.52% |
| 30+ Day Delinquency Rate | 0.7% | 1.1% | 1.2% | 1.2% | 1.6% |
CreditSight View Comment
AS OF 06 Aug 2025We reiterate our Underperform recommendation on Honda Motor Co. and American Honda Finance Corporation notes based on relative value and its weak but improving consolidated operating profit outlook.
Recommendation Reviewed: August 06, 2025
Recommendation Changed: May 15, 2025
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Fundamental View
AS OF 25 Mar 2025Toyota is back on the path to normalized production schedules following its vehicle certification challenges in Japan during 1H25 that disrupted production of certain models. The company expects 10 mn units of retail sales in FY25, which would enable it to retain its place as the leading global automaker by volume. Toyota expects sales of its hybrid electric vehicles (HEVs) to account for 46% of retail sales this year, up from 37% in FY24, which is beneficial to customers and the company alike as management claims its HEVs are more profitable than its ICE vehicles. While Toyota was late to the BEV party and BEVs account for a paltry 1% of its retail sales, it has made significant BEV investments that will support the rollout of new BEV models and volumes over the next couple years.
Business Description
AS OF 25 Mar 2025- Toyota Motor Corp. (TMC) engages in the manufacture and sale of motor vehicles and parts. It operates through the following segments: Automotive, Financial Services, and All Other. The Automotive segment designs, manufactures, assembles and sells passenger cars, minivans, trucks, and related vehicle parts and accessories. Toyota is also involved in the development of intelligent transport systems. The Financial Services segment offers purchase or lease financing to Toyota vehicle dealers and customers. It also provides retail leasing through lease contracts purchased by dealers. The company was founded by Kiichiro Toyoda on August 28, 1937, and is headquartered in Toyota, Japan.
- Toyota Financial Services Corporation (TFSC), a wholly owned subsidiary of TMC, oversees the management of Toyota's finance companies worldwide. Toyota Motor Credit Corporation (TMCC) is the company’s principal financial services subsidiary in the United States. Under terms of the credit support agreement between TFSC and TMCC, TFSC agrees to: (1) maintain 100% ownership of TMCC; (2) cause TMCC and its subsidiaries to have a tangible net worth of at least $100,000; (3) make sufficient funds available to TMCC so that it will be able to service the obligations arising out of its own bonds, debentures, notes and other investment securities and commercial paper. The terms of the credit support agreement between TMC and TFSC are very similar to the terms of the TFSC and TMCC credit support agreement.
Risk & Catalysts
AS OF 25 Mar 2025Consolidated vehicle sales are expected to decline by less than 1% YoY, unchanged from last quarter but modestly below its initial FY25 expectation for a modest sales increase of less than 1%. While management affirmed its vehicle sales forecast, it changed the regional composition of sales by boosting its projected sales in North America and Europe while lowering its forecast for Japan, Asia, and other regions.
The company raised its FY25 revenue forecast by 2% from ¥46 tn to ¥47 tn based on the regional shift in expected sales and currency changes. Management also raised its FY25 consolidated operating income forecast to ¥4.7 tn, up 9% compared to its previous forecast of ¥4.3 tn. The higher guidance is based primarily on currency impacts (+7%), especially transactional currency impacts on exports to the US, lower material costs (+3%), and marketing efforts (+4%). These benefits are expected to be partially offset by higher expenses (-2%) and other items (-3%), including the Hino Motors certification debacle.
Key Metric
AS OF 25 Mar 2025| $ mn | FY21 | FY22 | FY23 | FY24 | F3Q25 |
|---|---|---|---|---|---|
| Total Company Earning Assets | 116,546 | 117,659 | 120,018 | 129,707 | 133,925 |
| Cash and Investments | 8,195 | 7,670 | 6,398 | 8,570 | 8,284 |
| Total Liquidity | 35,895 | 36,070 | 33,498 | 37,570 | 36,984 |
| Unsecured Debt | 85,513 | 82,288 | 78,949 | 88,083 | 89,994 |
| Secured Debt | 24,212 | 26,864 | 32,736 | 34,337 | 35,425 |
| Total Debt | 109,725 | 109,152 | 111,685 | 122,420 | 125,328 |
| Allowance % Retail Rece. | 1.64% | 1.66% | 1.83% | 1.81% | 1.80% |
| Allowance / Net Charge-offs | 4.50x | 6.68x | 3.03x | 2.32x | 2.02x |
| Net Charge-offs % Avg. Receivable | 0.39% | 0.26% | 0.63% | 0.82% | 0.89% |
| 30+ Day Delinquency Rate | 1.2% | 1.8% | 2.3% | 2.6% | 2.9% |
CreditSight View Comment
AS OF 08 Aug 2025We reiterate our Underperform recommendation on notes of Toyota Motor Co. and Toyota Motor Credit Corporation based primarily on relative value, although we consider the Toyota bond complex to be a relatively safe haven for long-term investors.
Recommendation Reviewed: August 08, 2025
Recommendation Changed: May 09, 2025
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Fundamental View
AS OF 21 Mar 2025Korea National Oil Corp’s credit profile is underpinned by its integral link to and highly strategic policy role for the Korean government; its credit rating is equalized to Korea’s sovereign rating.
KOROIL’s standalone credit profile is weighed down by its smaller scale compared to other Asian national oil producers, its lack of downstream integration, elevated leverage and a low cash coverage of short-term debt.
That said, we are not overly concerned as we take comfort in its highly strategic policy role to the Korean government, which translates into strong government financial support (codified in law under the KNOC Act) and enables KOROIL to enjoy robust access to both domestic and overseas funding channels.
Business Description
AS OF 21 Mar 2025- In FY24, KOROIL derives its revenues from oil & gas sales (91% of revenues), oil stockpiling (7%), and others including petroleum distribution (1%).
- The oil and gas sales segment is responsible for exploration and development of domestic and overseas resources and sales of crude oil. KOROIL has 29 E&P projects in 15 countries (including Canada, UK, US, Libya, Kazakhstan, Vietnam and UAE), with total production capacity of 136 mboe/day and proven reserves of 931 mmboe. It owns nine strategic petroleum reserve facilities across South Korea with total capacity of 146 mmboe and total reserves of 99.5 mmboe. ME/Asia, Americas and Europe/Africa account for 40%, 33% and 27% of its daily output volume respectively. That said, its daily production capacity (136 mboe) is relatively small compared to its Asian E&P peers, such as CNOOC, CNPC and Sinopec which produce 1-3 mmboe per day; it is not active in the mid-stream oil refinery segment, unlike the other national oil companies in Asia.
- KOROIL maintains oil stockpile of 115 days of net imports, higher than France (82 days), Germany (91 days) and comparable to Japan (120 days).
- Similar to other Korean quasi-sovereign corporates, the Ministry of Trade, Industry and Energy, and the Ministry of Economy and Finance of the Korea government supervise KOROIL's budgeting, business planning and financial performance, and appoint its president, auditors and nonstanding directors of the board.
Risk & Catalysts
AS OF 21 Mar 2025Compared to Chinese national oil companies, such as Sinopec and CNPC, KOROIL is less diversified with limited mid and downstream operations such as refining, chemicals, sales and marketing. This makes the firm’s profitability more vulnerable to cyclical oil & gas prices. A substantial decline in oil and gas prices will have a negative impacts on KOROIL’s topline and also lead to impairment losses on its assets.
Pursuant to the June 2016 Government Plan, KOROIL has developed and is implementing a plan for the sale of its interests in less profitable overseas E&P projects, including projects with unsuccessful explorations, less-than-expected reserves and subject to geopolitical/political uncertainties, and could result in asset write-offs.
As majority of KOROIL’s E&P assets are located offshore, its business performance is subjected to exchange rate fluctuations and regional geopolitical risks.
Key Metric
AS OF 21 Mar 2025| KRW bn | FY20 | FY21 | FY22 | FY23 | FY24 |
|---|---|---|---|---|---|
| Debt to Book Cap | 113.2% | 116.5% | 112.4% | 111.4% | 110.2% |
| Net Debt to Book Cap | 107.1% | 110.6% | 107.6% | 107.1% | 108.1% |
| Debt to Equity | (856.4%) | (704.6%) | (903.7%) | (976.5%) | (1,083.4%) |
| Gross Leverage | 20.0x | 15.9x | 5.8x | 7.8x | 8.5x |
| Net Leverage | 18.9x | 15.1x | 5.6x | 7.5x | 8.3x |
| Interest Coverage | 1.6x | 2.3x | 5.9x | 4.0x | 3.6x |
| EBITDA Margin | 38.0% | 46.8% | 67.7% | 60.4% | 58.3% |
CreditSight View Comment
AS OF 24 Mar 2025We have an Outperform recommendation on Korea National Oil Corp. We expect the company’s government shareholding and strong policy role, and the resulting excellent funding access will continue to mitigate its elevated leverage and low cash coverage of short-term debt. We like KOROIL for high-quality carry, and we view its curve as attractive compared to other Korean quasi sovereigns, BBB-rated Korean IG corporates and Chinese quasi-sovereigns. We prefer its longer-dated 30s, 31s and 32s which are trading >20 bp wider than similar maturities of China quasi-sovereign issuers rated 2-3 notches lower.
Recommendation Reviewed: March 24, 2025
Recommendation Changed: November 06, 2023
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Search topics about wealth insights and investments.SM Investments Corporation
- Sector: Banking and Real EstateRetail
- Sub Sector: Diversified Conglomerate
- Country: Philippines
- Bond: SMPM 5.375 29
- Indicative Yield-to-Maturity (YTM): 4.91%
- Credit Rating : M/P
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Fundamental View
AS OF 20 Mar 2025- SMIC (SM Investments Corporation) is the obligor for the SMPM 29 bond. In finance, an obligor is the party (individual or entity) that has a legal or contractual obligation to another, in this case, to make payments (principal and interest) on the bond to the bondholder.
- We continue to be optimistic about the growth of SM Investments Corporation (SMIC) given its net income growth of 9% year-on-year (YoY) in Q3 2024. Credit quality remains strong given its net debt to equity ratio of 53.84% along with its dominant market position in multiple sectors.
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Search topics about wealth insights and investments.Republic of Mexico
- Bond: MEX 1.43 27
- Indicative Yield-to-Maturity (YTM): 1.58%
- Credit Rating : Baa2 / BBB+ / -
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Country Overview
AS OF 19 Mar 2025- Mexico, the second largest economy in Latin America and among the world’s top 15, generated an estimated GDP of USD 1.79 trillion in 2023. (World Bank, 2023).
- While the World Bank classifies Mexico as an “Upper-Middle Income, Developing” economy with a per capita GDP of USD 24,766.6 (2023), MSCI’s 2024 Market Classification Review designates it as an Emerging Market, indicating that it is adequate but still developing.
- Though a net importer, Mexico boasts a robust export sector, primarily in petroleum, digital processing units, and automobiles, which generated approximately USD 82.8 million in revenue (WITS, 2022).
- This economic activity is largely fueled by the services sector, contributing roughly 60% to GDP, and an increasingly skilled, yet affordable, workforce (Global Finance Magazine, 2024).
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Search topics about wealth insights and investments.Security Bank
- Sector: Financial Services
- Sub Sector: Banks
- Country: Philippines
- Bond: SECBPM 5.5 29
- Indicative Yield-to-Maturity (YTM): 4.704%
- Credit Rating : BBB
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Fundamental View
AS OF 27 Feb 2025- Security Bank is the 7th largest bank in the Philippines by total assets and was established on June 18, 1951. Its dollar bonds provide better yield pickup compared to its nearest comparable. We remain comfortable with the bond given Security Bank’s total capital ratio of 14.20%, which is 400 basis points above the minimum regulatory hurdle, which can buffer modest credit losses in its loan portfolios should macroeconomic headwinds worsen.
Business Description
AS OF 27 Feb 2025- Security Bank is the 7th largest bank in the Philippines by total assets and was established on June 18, 1951. Security Bank’s businesses include wholesale banking, financial markets, and retail banking. The bank provides commercial banking services such as deposit products, loans and trade finance, domestic and foreign fund transfers, treasury, foreign exchange, and trust services.
- Security Bank's loan portfolio is 32% consumer & MSME, 28% middle market, and 40% corporate as of 3Q 2024.
Risk & Catalysts
AS OF 27 Feb 2025- Any rating downgrade of the Philippine sovereign would have a negative impact on Security Bank.
- Given the current rate cut environment that drives funding costs lower, Its strategy to aggressively capture market share in the retail and MSME segment might allow the bank to deliver faster growth and higher net interest income margin.
- Rapid expansion on higher yielding retail and MSME segments could worsen asset quality and increase credit costs.
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