Daily Brief Financials: Japan Post Bank, Swire Pacific (A), Pavilion Real Estate Investment Trust, Itau CorpBanca, Powerlong Real Estate Holdings, European Assets Trust Plc, Tether and more

• Tomorrow is BOJ Governor Kuroda’s last Monetary Policy Meeting, capping a ten year run as one of the most dynamic central bankers in the world.
• Tomorrow is also the day BEFORE the first day on which the Japan Post Bank (7182 JP) mega offering could price and the last day of bookbuild indications.
• I am not saying this is not coincidence, but it is worth thinking about the interplay.

• There were some positive takeaways from Swire stable’s set of FY22 accounts; however, the Hong Kong office segment faces increased vacancy rates, and new supply in 2023.
• Preceding my comments on Swire are the current setup/unwind tables for Asia-Pacific Holdcos. 
• These relationships trade with a minimum liquidity of US$1mn, and a % market capitalisation >20%.

• Pavilion Real Estate Investment Trust (PREIT MK) is expected to raise MYR$1.27bn (US$280m) to partially fund its acquisition of Pavilion Bukit Jalil mall (PBJ mall). 
• Non-Interested unitholders will vote on the planned acquisition in the next EGM to be held on 22 March 2023.
• In this note, we will discuss the deal dynamics, details on the planned acquisition, and the REIT’s recent financial performance. 

• At first sight, Itaú Unibanco’s offer for the minorities of Itaú Corpbanca is great value for Itaú Unibanco shareholders, but we do not believe that this is so clear cut
• In Chile, Itaú Corpbanca is addressing its scale issue through cost control and its digital banking strategy; Colombia is more of a challenge, not helped by President Petro’s anti-business attitude
• We see this as a fair offer for Itaú Corpbanca shareholders, given the drag from Colombia; yet it needs a successful Colombia disposal to create value for Itaú Unibanco shareholders

Lucror Analytics Morning Views comprise our fundamental credit analysis, opinions and trade recommendations on high yield issuers in the region, based on key company-specific developments in the past 24 hours. Our Morning Views include a section with a brief market commentary, key market indicators and a macroeconomic and corporate event calendar.

• Powerlong Commercial Management Holdings

In times of economic stress or extreme investor risk aversion, small-cap stocks are frequently indiscriminately sold down by investors, which has created significant headwinds for European Assets Trust (EAT) over the past 12 months. Factors like stock market volatility created by the war in Ukraine and associated secondary effects such as supply chain disruption, lower economic growth, higher inflation and more hawkish central bank activity have contributed to weak investor sentiment towards European small-cap stocks. Also, the rotation away from long-duration growth assets has presented seismic challenges for managers regardless of asset class, but especially for European smaller companies. In our November 2022 update on EAT, we made the case for backing the experienced management duo, and continue to believe that once markets focus on the fundamentals of the innovation, growth and cheapness in the market, EAT and European smaller companies are well placed to outperform again.

• Crypto optimists have said for the last few months that the worst is behind us.
• Just in the last year we’ve seen the collapse of crypto hedge funds, lenders and exchanges.
• They say the bad actors have been removed from the space and there’s only good news from here