CIMB Daily Fixed Income Commentary - 29 October 2014

Market Roundup

• US Treasuries weakened as players awaited outcome of the FOMC meeting. Most of what is anticipated is forward guidance as to how long the Fed will instill the low interest rate environment, even though the Fed is highly expected to announce end of the current QE3 asset purchases program.
• Malaysian government bonds moved within narrow range amid muted trading activities heading towards FOMC meeting, as daily volume shrank drastically from RM5.0 billion to RM1.4 billion.
• Thai government bonds extended losses, amid cautious stance well ahead of FOMC meeting. Aside, the risk-averse sentiment also dragged the daily transactions a tad lower to Bt12.5 billion, in contrast to Bt13.9 billion recorded on Monday. Players were seen better bidded along the short dated LB155A (-1bp) and LB15DA (unchanged).
• Indonesia government bond yields rose on weaker IDR currency due to uncertainty surrounding the possible delay on fuel price hike news and higher corporate demand on USD near month-end. Local players were seen trimming some position ahead of this week's FOMC meeting, with 10yr and longer tenures benchmark bonds most actively traded today.
• Despite a heavy pipeline primary deals, Asian credits were seen in good demand. Tewoo’s 3-year paper with a size of $400 million, garnered a decent btc ratio of 1.75 times, while issued at 210bps. Meantime, China Travel dual-tranche was heavily bidded, and received $2.7 billion orders for its $300 million 5-year bond (240bps), and $5.7 billion orders for the 10-year bond (245bps). On top of that, China Hongqiao priced its paper maturing 2018 at 6.875%, with a overwhelming btc ratio of 17.3 times.