AsianBondsOnline Newsletter (22 July 2013)

News Highlights - Week of 15 - 19 July 2013

The People's Bank of China (PBOC) moved to liberalize commercial bank lending rates last week by removing the lower limit on these rates, previously set at 30% below the benchmark lending rate, which remains in place at 6.0% Also, the People's Republic of China (PRC) expanded the Qualified Foreign Institutional Investor (QFII) program's quota from US$80 billion to US$150 billion. It also expanded the Renminbi Qualified Foreign Institutional Investor (RQFII) program's coverage to include Singapore and London in addition to Hong Kong, China.

*     Industrial production growth in the PRC rose 8.9% year-on-year (y-o-y) in June, following 9.2% growth in May, while the PRC's retail sales growth accelerated to 13.3% y-o-y in June from 12.9% in May. Meanwhile, Singapore's retail sales increased 2.1% month-on-month (m-o-m) in May.

*     The producer price index (PPI) in the Republic of Korea fell 1.4% y-o-y in June, marking the ninth consecutive month of a y-o-y decline in producer prices. Consumer price inflation in Malaysia rose 1.8% y-o-y in June.

*     Remittances from overseas Filipinos rose 6.2% y-o-y in May to US$2.1 billion, exceeding the US$2.0 billion mark for the second consecutive month. Singapore's non-oil domestic exports (NODX) declined 8.8% y-o-y in June, following a 4.6% decrease in the previous month.

*     Moody's downgraded its outlook for Singapore's banking system from stable to negative last week, due to a recent period of rapid loan growth and rising real estate prices.

*     Foreign direct investment pledges into the Republic of Korea climbed 12.5% y-o-y to US$8.0 billion in 1H13, according to the Ministry of Trade, Industry & Energy. Meanwhile, asset-backed securities (ABS) issuance in the Republic of Korea jumped 35.5% y-o-y to KRW26.8 trillion in 1H13.

*     Tianjin Binha Rural Bank and Chongqing Rural Bank announced plans to issue the first Tier 2 bonds in the PRC with a loss-absorbency feature under Basel III guidelines. Also last week, Bank of Communications announced plans to issue a small and medium-sized (SME) financing bond with a planned size of CNY10 billion.

*     Hong Kong, China last week issued HKD2 billion of 5-year HKSAR bonds. Singapore's United Overseas Bank Limited (UOB) priced SGD850 million of non-cumulative non-convertible perpetual notes at 4.90%. In Thailand, the Bank for Agriculture and Agricultural Cooperatives (BAAC) issued THB8.8 billion worth of 3-year bonds at a coupon rate of 3.1714% and THB1.2 billion of 3-year bonds at a 3.14% coupon. Viet Nam Development Bank (VDB) issued a VND30 billion government-backed bond with a maturity of 5 years and a coupon rate of 8.5%.

*     MagnaChip Semiconductor based in the Republic of Korea priced US$225 million worth of 8-year bonds at a coupon rate of 6.625% last week, while the Korea Development Bank (KDB) raised EUR200 million from a tap of its existing EUR500 million 5-year bond.  Finally, UOB issued its first renminbi-denominated bond worth CNY500 million and carries a yield of 2.6%. 

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