Credit Market Watch: Summary for week ending 19-Jun

Credit Market Watch: Summary for week ending 19-Jun

·         MYR Credit:

Ø  MGS rallied last week with yields down 7-10bps WoW after the more dovish FOMC statement and better performance in global bond markets. In MYR credits, sentiment improved with the movement in MGS with tighter bid-offers compared to the past 2 weeks. Trading was particularly active in the lower AA rating band.

Ø  Relative value: SEB'29 may offer some value given the 26bps difference from SEB'27 compared to a 4bps differential between the latter and SEB'26 based on last done yields.

Ø  Last week we placed a stable credit outlook on Anih as its mature traffic profiles support steady cash flow generation. The papers which carry a AA rating are trading at tight levels, possibly reflecting higher demand relative to supply of good credit toll road papers.

·         Asian USD Credit:

Ø  UST market gained in prices with the 10y UST yield stronger by 13bps WoW. Asian credit market in general turned more constructive post the US FOMC and market seemed a bit more optimistic about Greece striking a deal to avoid a "Grexit". JACI composite spread was unchanged WoW while JACI sovereign tightened by 6bps.

Ø  Sovereigns outperformed tracking pretty closely the strength of UST. The INDON curve rallied by about 10-15bps, the PHILIP curve roughly 5-10bps stronger while the MALAYS'25 stronger by 10bps WoW.

Ø  Good two-way flows were seen on Chinese IG with interest in financial, tech and property names. Short-end Chinese SOE and Korean quasi seemed resilient.

Ø  Credit action: Moody's concluded reviews on Malaysian banks following its new bank rating methodology earlier; no major revisions except for CIMB Group Holdings Bhd's issuer rating was downgraded to Baa1 from A3, Hong Leong Financial Group Bhd's issuer rating was raised to Baa1/positive from a stable outlook, while both AmBank (M) Bhd and RHB Bank Bhd's baseline credit assessments were upgraded to Baa3 from Ba1. West China Cement's rating outlook was raised to B1/positive by Moody's citing that the proposed shares subscription by Conch Cement will improve cash balance, equity position and liquidity profile.

·         CDS: EM Asia’s 5y CDS were little changed except Indonesia which tightened by 10bps WoW to 165bps.