Credit Market Watch: Summary for week ending 24-April_20150427

Credit Market Watch: Summary for week ending 24-April

·         MYR Credit:

Ø  Local credits traded firmer WoW but to a lesser extent than the rally in govvies, hence wider credit spreads as PDS lags. Buying interest was keen for AAA papers and GG space saw more liquidity. By the end of the week, market was still biddish but offers were being quoted wider. RHB Bank plans MYR500m 10NC5 tier-2 Basel-3 compliant subdebt. While Khazanah could be issuing the first tranche of its SRI sukuk in May.

Ø  Relative value: We think there is still some value in AAAs with selective names lagging behind the rally seen in Telekom and Plus papers. We maintain our stable outlook on IJM as the credit fundamentals remain intact despite MARC's negative outlook, and recommend buying on dips, if any at all.

·         Asian USD Credit:

Ø  UST yields rose marginally WoW. Asian credits were overall steady to somewhat tighter as on WoW basis JACI IG was flat, JACI HY up 2bps while JACI sovereign 6bps narrower.

Ø  Sovereigns INDONs and PHILIPs saw better buyers outperforming general Asian credit market. PETMK/MALAYS remain resilient with demand from real money accounts. While 1MDB's OGIMK retreated from recent rally widening 55bps WoW.

Ø  In the IG space Chinese property names were doing well with Greenland outperforming due to the asset swap with Shanghai Jingfeng to pave way for Greenland's listing on Shanghai stock exchange. S&P commented such move as credit neutral. Chinese HY property curve also grinded tighter, with interest in Shimao and Evergrande.

Ø  Baoding Tianwei, unit of central state-owned China South Industries Group, defaulted on interest payment which understandably is the first default by a state-linked company signalling China's willingness toward market-based pricing of risks in the debt market.

·         CDS: 5y CDS in EM Asia were tighter with China, Indonesia and Malaysia ended 2bps narrower, while Korea was 1bp lower WoW.

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