In Brief

• The Chinese government and central bank unveil further measures to minimize the economic impacts of the COVID-19 outbreak. This includes additional cuts across multiple key rates (medium term lending facility and loan prime rate).
  
  
• The interventions helped ensure market stability with repo rates trading in a narrow range. Meanwhile, Shibor yield trended lower and the yield curve steepened.
  
  
• The outlook for Chinese corporate issuers remain uncertain. Whilst the stimulus measures will help mitigate short term financial stress and slow down the pace of bond defaults; in the longer term, as emergency measures are unwound, the negative implications of slower economic growth will reemerge.
  
  
• Cash investors should remain focused on preserving cash, ensuring it remains liquid and secure. Continued monitoring and analysis of counterparty credit fundamentals also remain important. Solutions that provide higher liquidity, lower duration and stronger credit quality will be better positioned to weather the current uncertainty.

Download the full PDF