In the China property space, fundamentally weaker bonds have relatively steep5Y/10Y curves, while stronger credits have fairly flat spread curves.
For example, the BBB-rated GRNLGR bond trades at a bid Z-spread differential of c.83bps versus the BBB+ rated CHIOLI bond, which trades at a bid Z-spread differential of c.42bps.
Standard Chartered notes as follows on Friday:
We believe this is temporary and that curves of fundamentally weaker bonds will eventually flatten off as investors go down the credit curve in search of yield.