Credit Market Watch: Summary for week ending 29-May

Credit Market Watch: Summary for week ending 29-May

·         MYR Credit:

Ø  A combination of MYR and MGS weakness weighed on sentiment around the end of the week but the overall MYR credit market still show resilience. Activities tilted toward high grades in the 7-10y sector. Active names like PTPTN'24 (GG), Danga'20 (AAA), Telekom'24 (AAA) and Bumitama'19 (AA3) tightened a tad. Sime Darby's rating was downgraded by S&P from A/neg to A-/neg but market reaction was muted in both MYR and USD space.

Ø  Benih Restu, a debt SPV of Genting Plantation, raised MYR1b 10y (upsized from MYR0.5b) at 4.62% which is tighter than the range of initial guidance and at such pricing it is about one notch richer than its AA2 rating. That said, underpinned by Genting Plantation's decent business profile, solid credit metrics literally with net cash together with management's conservative risk attitude and a strong parent, we believe the name should trade on par/close to KLK's credit.

Ø  Relative value: At the long end part of the AAA curve TNB Western was transacted wider than Manjung. Both are viewed as equally strong credit hence we prefer the one with yield pickup.

·         Asian USD Credit:

Ø  10y UST yield dropped 9bps WoW while JACI spreads widened across from sovereign to IG and HY in a week filled with heavy primary issuances as selling generally overwhelmed buying although there were bottom fishers.

Ø  Sovereign yields rose WoW. MALAY'25 rose 7bps, PHILIP curve up 1-4bps while INDOs the higher beta regional sovereign saw yields rising 10-12bps in the belly sector.

Ø  Chinese HY underperformed, especially property names e.g. Agile, Central China, CIFI and Country Garden all widened WoW but Chinese IG was relatively resilient.

Ø  New issues: Garuda Indonesia sold USD500m 5y at 6.125% reportedly was four times oversubscribed. Post issuance the bond rose up to 1pt as we understand with retail demand but has since weakened a tad from high. Other new issues include Guangzhou Communications, Peking University Founder, Hong Kong SAR, Global Logistics Properties and etc.

·         CDS: EM Asia CDS spreads that we monitor all widened WoW. Indonesia underperformed regional peers rising 9bps to 169.