AsianBondsOnline Newsletter (13 October 2014)

To read the full report, data and graphs go to http://www.asianbondsonline.adb.org/newsletters/abowdh20141013.pdf?src=newsletter&id=uWidK3KdmgXVUWes9IgIcqKp1miwxx

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News Highlights - Week of 6 - 10 October 2014

Japan's merchandise trade deficit narrowed to JPY768.0 billion in September from JPY1.0 trillion in the same month a year earlier as exports increased at a faster pace than imports. Exports of goods increased 7.5% year-on-year (y-o-y) to JPY4.3 trillion, while merchandise imports rose 1.3% to JPY5.0 trillion. Japan’s current account surplus narrowed to JPY287.0 billion in August from JPY417.0 billion in July. In Malaysia, exports rose 1.7% y-o-y in August from revised growth of 0.8% in July. The trade surplus widened to MYR3.9 billion in August from MYR3.6 billion in July. In the Philippines, merchandise exports increased 10.5% y-o-y to US$5.5 billion in August.   

*     In the Philippines, consumer price inflation eased to 4.4% y-o-y in September from 4.9% in August due to lower annual increases in prices of food and non-alcoholic beverages,  housing, water, electricity, gas, and other fuels and transport . The lower annual increases in these items were mainly due to ample domestic food supplies, and downward adjustments in electricity rates and fuel prices.

*     Net foreign investment in the Republic of Korea’s local currency (LCY) bond market amounted to KRW499 billion in September, a reversal from the previous month’s net bond outflows of KRW82 billion.

*     The People’s Republic of China (PRC) passed new rules allowing local governments to issue bonds directly subject to a quota.  However, proceeds can only be used to either repay existing debt or fund public services. They can no longer issue bonds through special funding vehicles or local-government-owned corporations.

*     The PRC lifted restrictions on loans made by banks to property companies. The PRC removed a ceiling that limited banks to lend no more than 10% of their total portfolio to property companies. 

*     Bank of China last week announced plans to debut its Additional Tier 1  issuance under Basel III rules. The perpetual issuance will be callable in 5 years with an indicative yield of 6.5%–7.0% and an issue size of US$6.5 billion. Greenland Holdings Group priced a  US$500 million 3-year Reg S bond at a copon rate of 3.5%. ABC International, a subsidiary of Agricultural Bank of China, priced a 3-year US$300 million Reg S bond at a coupon rate of 2.1%. 

*     Korea Exchange Bank priced a US$300 million 10-year Basel III-compliant Tier 2 bond at a coupon rate of 4.25%.

*     In Thailand, Land & Houses issued a THB4.0 billion 3-year debenture at a coupon rate of 3.50%, while Thai Union Frozen Products sold THB3.5 billion worth of 10-year debentures at a coupon rate of 4.58% and THB1.0 billion of 7-year bonds carrying a 4.21% coupon.  The Lao People's Democratic Republic offered THB1.8 billion worth of 3-year bonds at a coupon rate of 4.7%, THB1.9 billion of 5-year bonds at 5.2% coupon, and THB1.5 billion of 7-year bonds at 5.5% coupon.

*     LCY government bond yields fell last week for all tenors in Indonesia and Viet Nam.  Yields rose for all tenors in the Republic of Korea. Yields fell for most tenors in the remaining markets. Yield movements in Hong Kong, China and Singapore tracked US yields while Philipines movements were in response to the fall in the inflation rate.  Yield spreads between 2- and 10-year tenors widened in Hong Kong, China, the Republic of Korea, Philipines and Viet Nam while spreads narrowed in the remaing markets.

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