Indonesia HY Credits Are Easy Targets, Stay With China

(Bloomberg) -- Indonesian high-yield dollar bonds may get further hit when global funds reassess risk exposure, and
investors may prefer to stay invested in Chinese peers until emerging markets stabilize, according to Lucror Analytics.

“Together with India, they are the first to get hit from the currency side, given their relatively weaker balance-of-payments
position,” says Charles Macgregor, Singapore-based head of Asia at the credit research firm. “I would not recommend coming in for the next 3 to 6 months, for the market selloff at this stage may still have some way to go”

Many of the USD borrowers are property developers, and the Indonesian real-estate market has underperformed for the past two or three years, he says.

“One could find better relative value among Chinese developers. A trade or tariff war makes great headlines but apart from potential slip in GDP growth, Chinese developers are rather insulated from that”.

Lucror favors notes sold by Shimao, Yuzhou and Agile, as well as Times China Holdings’ 2021s and Powerlong’s 2020s and 2021s; Underweight on Pakuwon 2024s and Lippo Karawaci bonds. 

2018-09-05 08:09:17.724 GMT

​By David Yong and Carrie Hong