CIMB Daily Fixed Income Commentary - 24 November 2014

Market Roundup

• US Treasury yield curve ended flatter ahead of the weekend, alongside the ECB President Mario Draghi’s dovish statement, and the unexpected interest cut decision of PBoC on Friday.
• Ringgit denominated sovereign bonds were dealt mixed, as players awaited for CPI number on Friday for further guidance. We saw some bidding interest along short and medium dated papers, included MGS Sep’16 (-6bps), Jul’24 (-2bps) and Feb’15 (-2bps).
• Thai government bonds posted losses on Friday, as some players reacted on the positive view from Finance Minister Sommai Phasee, who revealed that the government may garner an increase of 18% in the state spending for year 2015, due to the higher tax revenue.
• Indonesian sovereign yield curve shifted lower, continued its bullish movement this week post-fuel price hike. Foreign players were still bidding along bonds in belly to long end of the curve. Near midday, bidding interest was also heavy in shorter dated segment between 2yr-5yr. Market slowed down a bit in afternoon session with some local players involved in profit taking action.
• Asian dollar credits hovered near prior levels on Friday, as market focus was the newly priced Alibaba’s $8 billion bonds. Alibaba issued the 3-, 5-, 7-, 10- and 20-year fixed rate tranches at 70, 95, 115, 128 and 148bps respectively, while the 3-year floater was launched at L+52bps. The shorter dated bonds tightened up to 5bps, while the longer dated bonds were noted up to 20bps tighter.