AsianBondsOnline Newsletter (15 December 2014)

To read the full report, data and graphs go to http://www.asianbondsonline.adb.org/newsletters/abowdh20141215.pdf?src=newsletter&id=uWidK3KdmgXVUWes9IgIcqKp1miwxx

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News Highlights - Week of 8 - 12 December 2014

Bank Indonesia decided to keep its benchmark interest rate steady at 7.75% based on its assessment that the benchmark rate remains consistent with efforts to keep inflationary pressures at bay and reduce the current account deficit to a more sustainable level. The Bank of Korea's Monetary Policy Committee kept its policy rate steady at 2.0% amid decelerating consumer price inflation in November. In the Philippines, the Monetary Board of the Bangko Sentral ng Pilipinas decided to keep its key policy rates?the overnight borrowing and lending rates?steady at 4.0% and 6.0%, respectively, noting a manageable inflation environment.

*     On 11 December, Moody’s Investor Service (Moody’s) upgraded its sovereign credit rating for the Philippines to Baa2 from Baa3, with a stable outlook. Moody’s upgrade is based on an improvement in the country’s fiscal position; expectations of continued strong economic growth, supported by both private sector investment and household consumption; and the Philippines’ resilience to external pressures affecting other emerging markets.

*     The People’s Republic of China’s (PRC) consumer prices rose at a slower pace in November than in October—1.4% year-on-year (y-o-y) from 1.6%—due to slower increases in food prices. Also, the PRC’s producer prices fell –2.7% y-o-y in November, a faster rate of decline than October’s –2.2% dip. PRC's retail sales rose 12% y-o-y in January-November to CNY23.66 trillion from 11.7% in the January-October period. Industrial production slowed to 7.2% y-o-y in November from 7.7% in October, while in Malaysia, industrial production rose 5.0% y-o-y in October from 5.4% in September.

*     Japan’s 3Q14 real gross domestic product (GDP) growth was revised downward to -0.5% quarter-on-quarter (q-o-q) from a preliminary estimate of -0.4% due to an increase in public demand of 0.5% and a larger decrease in gross fixed capital formation of –0.9%.

*     Japan's merchandise trade deficit slightly increased to JPY766.6 billion in October from JPY714.5 billion in September as imports increased at a faster pace than exports. Japan’s current account surplus narrowed to JPY833.4 billion in October from JPY963.0 billion in September, driven by an expanding goods and services account deficit. In the Philippines, merchandise exports increased 2.9% y-o-y to US$5.2 billion in October, led by growth in five major product categories. Electronic exports, which accounted for the largest share of total merchandise exports (43.0%) in October, increased 4.5% y-o-y.

*     The Credit Guarantee and Investment Facility (CGIF) closed Masan Consumer Holdings’ (MCH) 10-year VND2.1 trillion corporate bond with a fixed rate of 8.0%, its first guarantee for a Vietnamese local currency bond.

*     Yields rose for all tenors in the PRC, Indonesia, Malaysia, and Viet Nam and for most tenors in Hong Kong, China, the Philippines, and Singapore. Yields fell for most tenors in Japan, the Republic of Korea, and Thailand. Malaysia’s bond yields surged between 1 basis point (bp) to as much as 40 bps for 3-month to 20-year tenors on concerns that a global slump in oil prices will erode government revenue and result in higher budget deficit. The 2-year versus 10-year spread rose in Indonesia, the Republic of Korea, Malaysia, the Philippines and Singapore but fell in other markets.

*     The 15 December issue of the Weekly Debt Highlights is the last issue for 2014. Issuance will resume on 12 January 2014.

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