Asia Credit Monday Morning Ideas: OW PRXNA ’33 & ’36; OW Australia floating-rate tier-2

Research evidence excerpt

Asia Credit Monday Morning Ideas: OW PRXNA ’33 & ’36; OW Australia floating-rate tier-2

Japan

yusuke.ikeda@bofa.com

($100, G+138bp & 5.9% YTM) with OW recommendations. We view PRXNA bonds as an

attractive proxy for TENCNT bonds, with the ’33 & ’36 offering a compelling c.85bp RachnaResearchJain,AnalystCFA

pickup over the latter (vs. 1-year average for belly PRXNA bonds: c.80bp). Prosus has a Merrill Lynch (Singapore)

rachna.jain2@bofa.com

sizeable c.23% stake in Tencent, which amounts to c.USD127bn (vs. total debt:

Suyang Lu

c.US$18bn). We believe Prosus can benefit from Tencent's favorable fundamentals trend Research Analyst

and shareholder-friendly policies (including share buybacks and growing dividends). Merrill Lynch (Hong Kong)

suyang.lu@bofa.com

Prosus' recent FY26 results showed strong revenue growth (+57% YoY), improved

Di Miao, CFA

EBITDA margin (up 3pt YoY to 10.9%), and low gross LTV (9.8%) (see our report FY26: Research Analyst

strong EBITDA growth but net debt position; OW short end & belly). We believe the Merrill Lynch (Hong Kong)

dmiao@bofa.com

company will remain focused on improving the performance of its ex-Tencent

Jing Peng

businesses & disciplined in investment. While we believe it will continue to sell its Research Analyst

Tencent shares to fund its share buybacks & investments, a gradual decline in its Merrill Lynch (Hong Kong) jing.peng2@bofa.com

Tencent stake is unlikely to affect its debt servicing capability even in the medium term.

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With Chinese tech bonds’ generally tight valuation and Prosus’ recent issuance, we see

scope for Asian investors to get increasingly involved in PRXNA bonds, boding well for

their technicals. PRXNA bonds trade at the wider end of Asian tech bonds and c.80-90bp Acronyms on page 2