AsianBondsOnline Newsletter (16 June 2014)

To read the full report, data and graphs go to http://www.asianbondsonline.adb.org/newsletters/abowdh20140616.pdf?src=newsletter&id=uWidK3KdmgXVUWes9IgIcqKp1miwxx

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News Highlights - Week of 9 - 13 June 2014

Last week, the People’s Republic of China (PRC) announced that it would reduce by 50 basis points (bps) the reserve requirement ratio (RRR) of banks with loans to agricultural-related enterprises and small- and medium-sized enterprises (SMEs) that comprise at least 30% of their total loan portfolio. The PRC’s consumer price inflation accelerated to a 4-month high of 2.5% year-on-year (y-o-y) in May from 1.8% in April, driven by an increase in food prices. The PRC's export performance recovered in May, rising 7.0% y-o-y. Imports, on the other hand, fell 1.6%. Meanwhile, the amount of new loans granted by PRC financial institutions rose to CNY870.8 billion in May, while growth in the M2 money supply accelerated to 13.4% y-o-y in May from 13.2% in April.

*     Last week, Bank Indonesia (BI) kept steady its benchmark rate at 7.50% for the seventh consecutive month. BI also left unchanged the lending facility rate at 7.50% and deposit facility rate at 5.75%. Meanwhile, the Bank of Japan (BOJ) announced that it would maintain its monetary easing measures, and the Bank of Korea (BOK) kept the base rate steady at 2.50%.

*     Hong Kong, China's industrial production index rose 2.1% y-o-y in 1Q14, following 4Q13's 0.5% increase. Meanwhile, Malaysia’s industrial production slightly eased to 4.2% y-o-y in April from 4.3% in March.

*     Singapore’s retail sales contracted 9.0% y-o-y in April after a revised contraction of 3.8% in March. Excluding motor vehicles, retail sales fell 1.3%. Philippine merchandise exports slightly increased 0.8% y-o-y to US$5.2 billion in April.

*     Last week, Japan Credit Rating Agency (JCRA) affirmed the Philippines’ sovereign credit ratings at BBB with a stable outlook. JCRA cited the Philippines’ economic growth being supported by strong domestic demand.

*     Public Islamic Bank Bhd. (PIBB) of Malaysia issued a 10-year MYR500 million subordinated sukuk murabahah carrying a profit rate of 4.75%, and the PRC’s Zhuhai Huafa group priced a CNH850 million 3-year bond at a yield of 4.25%.

*     Last week, the PRC’s Sinopec tapped its existing multi-tranche bond to raise an additional US$1 billion in three tranches: a 3-year US$300 million bond at 1.677%, a 10-year US$400 bond at 3.865%, and a 3-year US$300 million at a floating rate. Korea Exchange Bank raised US$500 million from its sale of 5-year bonds carrying a coupon rate of 2.5%. PTT Exploration and Production, based in Thailand, priced a US$1 billion perpetual bond at 4.875%.

*     Foreign net bond investment in the Republic of Korea totaled KRW0.8 trillion in May, down from KRW1.3 trillion recorded in April.

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

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