Deutsche Bank-Asia Macro Strategy Notes CCS monitor Our views on CNH CCS-117602326

T2se3r0Ot6kwoPaT2se3r0Ot6kwoPaDistributed on: 03/09/2025 00:02:04 GMTDistributed on: 03/09/2025 00:02:04 GMT3 September 2025Asia CCS updatesAs summer draws to a close, Asia CCS market presents a mixed picture, with notable divergence in performance.nCCS fixed rates have generally risen over the past two weeks, with the exception of SGD, IDR, and PHP. In the markets where CCS fixed rates went up, the underperformance is mainly due to the rise in Xccy basis, while the IRS sell-off has also added to the pressure. SGD CCS outperformed mainly due to a rally in IRS as SORA fell below 1%.nASW trades have performed well in Asia over the past two weeks, with the exceptions of CNH, SGD and INR. This performance is driven by a strong rally in local bonds across most markets, except in India and China. The rise in CCS fixed rates further contributed to the ASW trade performance. IDR and KRW delivered the strongest performance. The former was driven by a rally in local government bonds, while the latter benefited mostly from CCS sell-offs.Figure 1:Asia CCS performance-15-10-5051015SGDIDRPHPTHBMYRCNHINRKRWNet change over last two weeks5Y Xccy basis*5Y IRS5Y CCS*bpsSource :Deutsche Bank, Bloomberg Finance LP; Note: *We construct the implied Xccy basis for CCS markets where floating-to-floating swaps are not directly available ; and implied CCS fixed rate for markets where fixed-to-floating swaps are not directly available.Figure 2: Asia ASW trades performance-20-15-10-5051015CNHSGDINRMYRPHPTHBIDRKRWNet change over last two weeks5Y GB yield5Y CCS (inverted change^)5Y ASW spreadbpsSource :Deutsche Bank, Bloomberg Finance LP; Note: ^The grey bar represents inverted change in CCS fixed rates. Negative bar = increase in CCS fixed rate.Bryant XuStrategist+65-6423 5558Hazel LaiMacro Strategist+852-2203-6150Jalaj SinghResearch AssociateDeutsche Bank AG/SingaporeIMPORTANT RESEARCH DISCLOSURES AND ANALYST CERTIFICATIONS LOCATED IN APPENDIX 1. UNTIL 19th MARCH 2021 INCOMPLETE DISCLOSURE INFORMATION MAY HAVE BEEN DISPLAYED, PLEASE SEE APPENDIX 1 FOR FURTHER DETAILS.Deutsche BankResearch Asia Fixed Income Asia Macro Strategy Notes Date CCS monitor: Our views on CNH CCS3 September 2025Asia Macro Strategy NotesPage 2Deutsche Bank AG/SingaporeOur views on CNH CCSThe CNH Xccy basis (the spread between CNH CCS and CNY NDIRS) experienced a significant decline in the first half of this year, though it has been trading within a narrow range over the past two months. In this piece, we delve into the principal factors influencing the CNH CCS market and offer our views.We identify three key drivers shaping the CNH CCS market:nDeclining USD bond issuance by Chinese corporates: Chinese entities are significantly reducing their reliance on USD-denominated bonds for offshore funding. Monthly USD bond issuance by these corporates has plummeted to $3.2 bn, a stark contrast to the $12.9 bn monthly average seen in 2021. This strategic pivot has reduced demand for paying CNH CCS, eas