RHB FIC Credit Market Monthly Review - 3/6/15

3 June 2015

Credit Market Monthly Review – May 2015

DM Risk Aversion Continues to Fuel APAC Interest

Market Review

¨   DM risk aversion fuels APAC interest; credits maintain resilience; HY real estate demand undeterred.

¨   In Singapore, SOR curve bear steepened on strong 1Q15 GDP; though indicators slowed in April.

¨   Easing returns from MYR Bonds (+0.15% in May).

Flows and Issuance Trends

¨   May sees USD20.75bn in new deals; banks led supply with mostly senior debt.

¨   Rush of SGD issuance as SORs continued to widen.

¨   A total of MYR7.3bn new deals hit the market in May.

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Sector Highlights

¨   MY Banking – NIM tightened to 2.17% (-8bps qoq), stagnant loan growth post-GST, NPL improved to 1.56% in Apr.

¨   MY Construction – Subdued property sector, construction to drive earnings.

Rating Trends

¨   More HY real estate downgrades.

¨   In Malaysia, Encorp Systemblitz on positive outlook; S&P downgraded Sime Darby to A-/negative.

Outlook

¨   Yields to be guided by FOMC decision.

¨   Slower primary in Malaysia PDS space.