AsianBondsOnline Newsletter (17 June 2013)

News Highlights - Week of 10 - 14 June 2013

Last week, Bank Indonesia's (BI) Board of Governors raised the deposit facility rate by 25 basis points (bps) to 4.25%. BI also raised its benchmark interest rate by 25 bps to 6.0%, after keeping the policy rate at a record-low 5.75% since February 2012. The Bank of Japan (BOJ) said that it will continue with the quantitative and qualitative monetary easing measures it announced at its 4 April policy meeting. The Bank of Korea's Monetary Policy Committee decided to keep the base rate--the 7-day repurchase rate--steady at 2.50%, following a 25 bps cut on 9 May. In the Philippines, the Monetary Board of the Bangko Sentral ng Pilipinas (BSP) kept its key policy rates--the overnight borrowing and lending rates--steady at 3.5% and 5.5%, respectively. The reserve requirement ratios and the interest rate for its Special Deposit Account facility were also left unchanged.

*     Industrial production growth in the People's Republic of China (PRC) fell slightly to 9.2% year-on-year (y-o-y) in May from 9.3% in April. Hong Kong, China's Industrial Production Index (IPI) rose at a slower pace of 0.5% y-o-y in 1Q13 from 1.3% in 4Q12. Malaysia's IPI increased 4.7% y-o-y in April, after 2 months of contraction, due to increases in manufacturing and electricity indices by 6.0% and 8.0%, respectively. In Japan, the Cabinet Office announced revised annualized real gross domestic product (GDP) growth of 4.1% in 1Q13, compared with a preliminary estimate of 3.5%.

*     Japan posted a JPY750 billion current account surplus in April, as the continued depreciation of the yen improved income receipts from investments abroad. In the Philippines, merchandise exports contracted 12.8% y-o-y in April to US$4.0 billion due to continued weakness in the global economy.

*     Retail sales in the PRC grew 12.9% y-o-y in May, up slightly from April's 12.8% growth. On a seasonally adjusted basis, Singapore's retail sales fell 0.5% y-o-y in April.

*     The PRC announced last week that it will issue CNH23 billion worth of bonds this year. An institutional tranche of CNH13 billion is slated to be offered on 26 June, with the remainder issued sometime during the year. The CNH13 billion institutional tranche will comprise CNH5 billion in 3-year bonds, CNH2 billion in 5-year bonds, CNH1 billion in 7-year bonds, CNH1 billion in 10-year bonds, CNH500 million in 15-year bonds, and CNH500 million in 30-year bonds.

*     The remaining CNH3 billion of this first tranche will be allocated to central banks and monetary authorities. The second offering will comprise a CNH7 billion institutional tranche and a CNH3 billion retail tranche. Meanwhile, United Overseas Bank priced its first offshore renminbi bond issue in Singapore. The 3-year 500 million renminbi bond carries a fixed coupon of 2.5% per annum.

*     Government bond yields fell last week for most tenors in the Republic of Korea. Yields rose for all tenors in Indonesia, and for most tenors in Hong Kong, China; Malaysia; the Philippines; Singapore; Thailand; and Viet Nam. Yield spreads between 2- and 10-year maturities widened in Hong Kong, China; the Republic of Korea; and Singapore, while spreads narrowed in most other emerging East Asian markets except for the PRC. Yield movements and yield spreads were unchanged in the PRC due to observation of national holidays.

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