AsianBondsOnline Newsletter (30 September 2013)

News Highlights - Week of 23 - 27 September 2013

Emerging East Asian local currency (LCY) bond markets continued to grow in 2Q13, but risks to the outlook are rising given the prospects of tighter US monetary policy, slower economic growth in Asia, and persistent capital outflows, according to the latest edition of the Asia Bond Monitor (ABM). The quarter-on-quarter (q-o-q) growth rate for emerging East Asian LCY bond markets in 2Q13 was 1.7%, down from 2.9% in 1Q13, as the region's markets reached US$6.8 trillion in size. The full issue of the ABM is available at http://asianbondsonline.adb.org/documents/abm_sep_2013.pdf?src=newsletter

*     Consumer prices in Hong Kong, China rose 4.5% year-on-year (y-o-y) in August from 6.9% in July. In Japan, consumer prices rose 0.9% y-o-y in August, the fastest pace recorded since 2008, following a 0.7% increase in July. Singapore's all-item consumer price index (CPI) edged up 2.0% y-o-y in August, the fourth consecutive monthly increase. In Viet Nam, inflation moderated to 6.3% y-o-y in September from 7.5% in August.

*     Hong Kong, China's exports fell 1.3% y-o-y in August following a 10.3% rise in July. Imports also fell 0.3% in August from an 8.3% increase in July. The Republic of Korea's current account surplus fell to US$5.7 billion in August from US$6.8 billion in July. Meanwhile, Singapore's manufacturing output increased 3.5% y-o-y in August, up from the revised increase of 3.0% in July. In Viet Nam, the trade deficit came in at US$300 million in September after posting a US$604 million surplus in August.

*     In the Republic of Korea for the month of August; department store sales improved 6.6% y-o-y following a 2.1% decline in July.  S&P has affirmed its foreign currency (FCY) and LCY credit ratings for the Republic of Korea at A+/A-1 and AA-/A-1+, respectively, with a stable outlook for both long-term ratings.

*     Malaysia raised MYR2.5 billion from issuing a 30-year bond, the longest-ever maturity on offer in Malaysia.  The bond was priced to yield 4.935%. Country Garden, one of the largest property developers in the People's Republic of China (PRC), raised US$750 million via a 7.5-year high-yield bond last week. The bond carries a yield of 7.25% and has three callable options after 4 years. Bangkok Bank based  in  Thailand raised US$1 billion from 5- and 10-year bonds (US$500 million each) carrying coupon rates of 3.3% and 5.0%, respectively.

*     In the Republic of Korea, Korea Hydro & Nuclear Power raised US$500 million from the sale of a 5-year bond at a coupon rate of 2.875%. Woori Bank raised US$500 million from the sale of a 5-year bond at a coupon rate of 2.875%, while GS Caltex priced US$400 million of 5-year bonds carrying a 3.25% coupon.

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