30 Comments
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Citrini's avatar

Positioning. I’m playing for a violent, flow driven unwind of existing positioning. That’s not going to be as strong with a first lien bond in this situation imo. But you can do whichever tenor or seniority you want! I didn’t specify in the article, I am just saying I like the 2031

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Ccw_mode's avatar

Citrini subs eating good tonight <3

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Brandon's avatar

Wow, can't wait to dig in!

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Bark's avatar

Nice to read a nuanced article on China.

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Ben P's avatar

Basket dropbox links are broken sir @citrini

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Citrini's avatar

Fixed! Thanks.

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Martin A's avatar

OMG, 58 pages !! Man, you're on fire :)

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Citrini's avatar

CORRECTION: The last line of page 50 which reads “COGARD & FTLNHD” should read “COGARD, FTLNHD, FUTLAN, ROADKG & AGILE” (aka it should reflect the names trading at 10-25 cents in Figure 38 titled “Relative Value of Chinese Property Bonds”)

It’s small but just clarifying.

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Lukas Marek's avatar

On page 23 of the report, you show a chart with household debt sevice to disposable income exceeding 120% in 2022. How can that be? Is disposable income net of debt service? Thx for explaining.

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AssidiousSamba's avatar

That was some heavy reading at times. I love it. Finished it all properly now.

Some of the plays are too foreign for me still so I can't put them on, I need to have a deep understanding myself, but I love paying attention to them.

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JN's avatar

Quick question - I don't have the ability to buy the full basket/barbell as listed in the china article, in your opinion, is HXC 'fine' to pick up to general exposure to the idea, or is it filled with enough crap that would impact the alpha meaningfully? If so, I'll pick a couple choice names from barbell

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JN's avatar

Appreciate the quick response! I deleted my chat and reposted as a comment because I didn't know that the chat was non-sub, didn't want to accidentally share your work beyond the paywall.

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Kukushka's avatar

You went for the 2026 COGARD bond?

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Citrini's avatar

2031

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Kukushka's avatar

Any reason why not the first lien feb 2026?

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Citrini's avatar

1L not gonna matter if SHTF and therefore not worth paying extra for (imo)

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Kukushka's avatar

I really need to know. Why the extra duration? Just due to price of the bond? Or anything else?

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Citrini's avatar

I went shorter duration with FTLNHD ROADKG and FUTLAN, with COGARD 2031 is the cheapest on the curve and the most likely to price in the maximum amount of optimism in a stimulus situation.

I did the same thing back in November playing property bonds and it worked VERY well but choosing the tenor and seniority etc. is not something I feel comfortable doing. I’m sure the senior sec and first lien ones will do well if these do, so pick what you’re comfortable with!

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Citrini's avatar

Also just to be clear I think you’re much better off owning a bunch of these that are trading under 10 cents rather than just 1. It’s going to protect you against idiosyncrasies. That’s why I said in the article just own the cheapest property bonds ex-EVERRE

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Kukushka's avatar

Thank you very much for the fast replies! GL

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Orfeo's avatar

I just made a plot about the long/short portfolio mentioned in the end, and found the good banks performed better than the not so good ones during 2008 and 2015.

What do you think were the drivers behind it and were they the same ones that will drive this cycle?

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Citrini's avatar

Yes

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Citrini's avatar

I’ll answer better later but yes

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Grant's avatar

Can't get the first PDF link to open. Saying file corrupted.

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Citrini's avatar

That’s a problem on your end. I just tried all the links and they worked.

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Kukushka's avatar

How can we trade the chinese 2s10s ?

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Citrini's avatar

NDIRS. But the answer is you probably can’t.

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Citrini's avatar

The reason why I mentioned it was because of the effect the yield curve has on bank profits. I also cannot trade NDIRS lol.

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