MARC AFFIRMS ITS RATING OF AAA(fg) ON TRIPLC VENTURES SDN BHD’S RM240 MILLION SENIOR MTN PROGRAMME

MARC has affirmed the rating of AAA_(fg) on special purpose vehicle TRIplc Ventures Sdn Bhd’s (TVSB) RM240.0 million Senior Medium Term Notes (Senior MTN) Programme with a stable outlook. The rating and outlook reflect the credit strength of an unconditional and irrevocable guarantee on the Senior MTN obligations provided by Danajamin Nasional Berhad (Danajamin) which carries a financial insurer rating of AAA/stable from MARC.

Wholly owned by TRIplc Berhad (TRIplc), TVSB holds a 23-year build-operate-transfer concession under a private finance initiative/public private partnership project to construct and maintain facilities in Zone 1 Phase 2 (Z1P2) of Universiti Teknologi MARA’s (UiTM) campus in Puncak Alam, Selangor. The construction phase was completed on April 11, 2014 as per schedule, while the 20-year maintenance phase has commenced with the issuance of Certificate of Acceptance by UITM. The lessee of the facilities in Z1P2, UITM has begun making availability charges (AC) and maintenance charges (MC) to TVSB, both of which form the source of repayment of the Senior MTN.

MARC deems the quantum of these payments under the concession agreement as sufficient to meet the principal and interest payments of the Senior MTN. TVSB’s standalone credit hinges on the company’s ability to meet performance requirements during the maintenance phase, and the timely receipt of payments from UiTM, which is funded by the Ministry of Higher Education. The rating agency notes that any administrative issue that could lead to a delay in AC and/or MC payments is moderated by the minimum required balance maintained in the debt service reserve account. The AC payments are fixed at RM42.5 million per annum throughout the concession tenure while the MC payments are subject to review every five years and conditional upon TVSB meeting specified key performance indicators (KPI). For the financial year ended May 31, 2015 (FY2015), TVSB managed to comply with the KPI imposed by UiTM, registering a 99.95% compliance with only RM7,000 deducted from the total MC payment.

Following the completion of construction in FY2014, TVSB registered revenue of RM16.3 million in FY2015. Its operating profit before interest and tax (OPBIT) and OPBIT interest coverage stood at RM39.6 million and 2.10 times respectively. With the full-year receipt of the AC and MC payments, TVSB registered positive cash flow generated from operations (CFO) of RM35.7 million (FY2014: negative RM70.5 million) and free cash flow (FCF) of RM25.6 million (FY2014: negative RM70.9 million). The company’s FCF generation turned positive, as a result of improved cash generation coupled with lower capital expenditure. This led to a higher cash balance of RM56.0 million compared to RM33.8 million in FY2014. The available cash balances would be primarily used for meeting Senior MTN interest payments of RM13.5 million and to finance total trade payables amounting RM18.3 million in FY2016. Meanwhile, its debt-to-equity ratio has been on a downward trend on the back of increasing retained earnings.

The base case pre-distribution minimum and average debt service cover ratio (DSCR) of 1.80 times and 2.37 times respectively for the remaining tenure of the Senior MTN provide a moderate buffer for any underperformance during the maintenance phase. The weakest post-distribution DSCR is seen in FY2023, following cumulative dividend distribution of RM95 million up to FY2023. The project is expected to generate, on average, annual FCF of RM54.3 million throughout the Senior MTN tenure, with the highest Senior MTN debt obligation of RM35.6 million occurring in FY2017. However, the company needs to preserve its cash buffer during the initial operational phase in order to remain in compliance with its covenanted post-distribution DSCR of 1.50 times. In the event the concession is terminated due to the non-performance of TVSB, UiTM will pay the concession company the outstanding amounts of TVSB’s loans obtained for the purpose of constructing the facilities.

Noteholders are insulated from any downside risks in the project’s credit profile by virtue of Danajamin’s unconditional and irrevocable guarantee. Any changes in the supported rating or rating outlook will hinge largely on changes in Danajamin’s credit strength.

Contacts: David Lee, +603-2082 2255/ david@marc.com.my.

October 30, 2015

AmWatch - Tenaga Nasional : Full-year impact from ICPT BUY, 30 Oct 2015

STOCK FOCUS OF THE DAY

Tenaga Nasional : Full-year impact from ICPT      BUY

We maintain BUY on Tenaga Nasional Bhd (TNB) with a lower DCF-derived fair value of RM14.80/share (vs. RM16.70/share previously) as we shift our base year to FY16F. TNB posted 4QFY15 core net profit of RM1.5bil on the back of RM11.7bil in revenue. This brings its full-year core net earnings to RM6.9bil, which met both our and market expectations. Our numbers exclude cumulative forex translation losses of RM819.35mil.

TNB’s revenue for the full year grew 1.2% on the back of an 8% growth in electricity sales. The higher sales can be attributed to higher average electricity tariff of 15% and 17% in Peninsular Malaysia and Sabah, respectively, effective Jan 2014. The topline also includes cost over-recovery of RM1.9bil under the Imbalance Cost Pass Through (ICPT) mechanism. TNB’s EBITDA margins had improved to 32% (vs. 28% in FY14). TNB is proposing a final single-tier dividend of 19sen, which will bring the total payout to 29sen for FY15 (yield: 2.4%). On the cost side, TNB saw a 9.6% reduction in fuel costs due to lower consumption of gas, LNG, distillate and oil. While coal consumption had increased to 22.2mil MT (vs. 19.3mil MT), coal price had averaged lower at USD66/MT (-13% from USD75/MT). Overall, gas & LNG still formed a large part of the generation mix (49.4%), followed by coal (46%). Looking into FY16F, coal consumption is expected to increase to 28mil following the commissioning of Malakoff’s Tanjung Bin 4 (1,000MW) in March 2016.

We tweaked our numbers to reflect a slower growth in electricity demand (FY15’s 2.2% vs. FY14’s 2.5%) over the few years. We expect TNB to continue to see cost over-recovery as fuel costs remain below the benchmark rates under the ICPT mechanism. While TNB’s existing operating prospects remain sound, concerns remain over its possible acquisition of Edra Global’s assets. Recall that 1MDB is estimated to have paid RM12bil to acquire the assets and inherited debts of RM6bil. According to reports, 1MDB is expected to announce the winning bid (out of three) by year-end. Management affirmed that due diligence would need to be conducted before any possible deal is signed. Maintain BUY.

Others :

Econ Watch : Impact of tariff liberalisation on Malaysia’s terms of trades 

QUICK TAKES

Tobacco Sector : Regulations on vaping soon       NEUTRAL

Plantation Sector : Key takeaways from Indofood Agri’s conference call                                 OVERWEIGHT

NEWS HIGHLIGHTS

Oil & Gas Sector: Shell posts biggest loss in more than a decade

REIT Sector : Sunway REIT posts modest income growth in Q1

RAM Ratings has reaffirmed the AA2/Stable rating of First Resources Limited’s (First Resources or the Group) RM2.0 billion Sukuk Musharakah Programme (2012/2022).

Published on 30 October 2015

Among the 10 largest (by planted hectarage) listed oil palm planters globally, First Resources’ favourable tree maturity profile (the weighted average age of its palms standing at about 9 years) remains an important growth driver for the Group. In 1H FY Dec 2015, the recovery of the Group’s Riau estates from biological tree stress and the successful rehabilitation of acquired plantations had fuelled an 18% y-o-y growth in fresh fruit bunch (FFB) production, with crude palm oil (CPO) production increasing 14% y-o-y. These factors, coupled with a lean cost structure, had translated into a commendable operating profit before depreciation, interest and tax (OPBDIT) margin of 50.3% (FY Dec 2014: 48.7%), providing the Group with a substantial buffer to weather the industry downcycle. Notwithstanding the competitive operating environment in the refining sector, First Resources’ integrated business model reduces its susceptibility to levies and policy changes that impact specific segments of the palm oil production value chain.
As with industry peers, weaker CPO prices in 1H FY Dec 2015 had weighed on First Resources’ cashflow debt coverage. The Group’s annualised funds from operations debt cover (FFODC) and operating cashflow debt cover (OCFDC) had declined to 0.25 times and 0.19 times respectively, as cashflow generation was constrained by weak prices. That said, production growth potential stemming from the Group’s large maturing areas as well as the higher yield potential of maturing trees are expected to sustain its FFODC at above 0.3 times over time.
Elsewhere, notwithstanding a higher gearing ratio that follows with amendments to FRS41 Agriculture, and the Group’s adoption of the cost model under FRS16 Property Plant and Equipment, effective 1 January 2016, First Resources’ leverage is envisaged to remain manageable. Its Debt/Annualised OPBDIT stood at 2.45 times as at end-June 2015, and is expected to be preserved below 3 times on a sustained basis. Reduced capex – amid the tapering of new planting plans – that would be sufficiently met by the Group’s internally generated cashflow, is expected to alleviate debt-funding pressure. Additional comfort is also derived from First Resources’ healthy liquidity profile and large cash pile of USD291 million (including USD92 million of restricted cash) amounting to about 55% of total outstanding debt as at end-June 2015.
The rating remains moderated by the Group’s susceptibility to volatile CPO prices and the cyclical nature of the plantation sector. An ample supply of substitute oils amid lacklustre demand growth and a weak crude-oil price environment are expected to keep CPO prices in check. That said, the effect of unfavourable weather conditions on palm oil production and a pick-up in biofuel demand as regional biodiesel mandates gain traction could alleviate inventory woes and ease downward pressure on CPO prices. Coupled with a weak ringgit, CPO is envisaged to trade between RM2,200/MT and RM2,400/MT in 2016.
In addition to the industry’s vulnerability to tax changes in producing and consuming nations, First Resources is deemed to operate within a more challenging landscape in Indonesia, as the republic’s still-evolving institutional and legal frameworks heighten operational uncertainties and complexities. Nevertheless, some comfort is drawn from the Group’s more than 20 years of operations and experience in managing some of these risks.

Media contact
Juliana Koay
(603) 7628 1169
juliana@ram.com.my

Maybank GM Daily - 30 Oct 2015

FX

Global

      Lower US 3Q GDP softened the dollar overnight. The print of 1.5%q/q undershot the consensus of 1.6%. Core PCE also decelerated to 1.3%q/q from previous 1.9%. Equities hardly reacted, flat lining throughout overnight session and ended in mild red. In contrast to the US data, the EUR drifted higher, supported by better economic confidence out of the European bloc. Oct consumer confidence printed a score of -7.7, 1.4 standard deviations above its long term average of -12.5.

      Earlier in Asia, China ended the fifth plenum with China targeting medium to high economic for 2016-2020. Premier Li said the country needs 6.53% growth in next five years, implying that this number could be the floor for growth target. CNH bucked the trend in the region by strengthening 0.6% against the USD amid whispers of aggressive USDCNH offers from Chinese names. Another outcome of fifth plenum that made headlines was China’s decision to allow two-children to boost consumption. NZD bounced at the announcement, leading the AUD slightly higher. CNH is now trading at a premium to CNY, against the USD.

      Antipodeans have found some strength this morning with NZD up a rebound in business confidence at 10.5 for Oct from previous -18.9. 3Q PPI was the booster for AUD which eased concerns that excess capacity in Australia might force a rate cut next week. Elsewhere, stronger industrial production in Sep for South Korea boosted the won this morning, in the lead at +0.4%. MYR is on the backfoot, weighed by the fall in brent crude prices overnight. There is little other tier one data out of the region except Thailand’s exports number. Day ahead the key focus on BoJ, if they conduct further monetary easing. We expect BoJ to add to its easing measures given the lack of inflationary pressures amid sluggish growth. Expect weekend positioning ahead of the week that leads into US NFP.

Currencies

G7 Currencies

      DXY – Buy on Dips. USD was a touch softer overnight despite UST yields rising (as markets continued to react to recent FOMC). Implied probability of Fed move in Dec (implied from Fed Fund futures) has now risen to the highest for the year at 50%, from 33% before the FOMC meeting.  Headline 3Q GDP was a touch below market expectation, dragged by inventories but domestic demand was strong.  DXY was last at 97.20. Weekly, daily momentum continues to indicate a bullish bias; although daily stochastics is rapidly entering overbought areas. Key resistance remains at 97.42 (61.8% fibo retracement of Mar high – Aug low).  We look for a move higher towards 98.55 levels (76.4% fibo and Aug high) on the break. Remain better buyers of USD on dips. Support at 96.50 levels (50% fibo). Day ahead brings PCE Core (Sep); Fed's Williams Speaks; U. of Mich. Sentiment on Fri.

       EUR/USD – Fade Strength. EUR bounced overnight amid USD weakness. EUR was last at 1.0980 levels at time of writing. While daily momentum continues to indicate a bearish bias, stochastics is suggesting tentative signs of oversold conditions. Key support at 1.0980 (trend line support from Mar and Apr lows), 1.0940 (61.8% fibo retracement of Mar – Aug) levels. Need to see a clean break of those supports for further downside towards 1.0830-40 levels (Jul-Aug 2015 support), 1.0760 (76.4% fibo) to materialise. We remain better sellers on rallies towards resistance at 1.1090 (50% fibo) - 1.1110 (200 DMA). Day ahead brings FR PPI, consumer spending (Sep): EC CPI (Oct) on Fri.

       GBP/USD – Range. GBP rose amid USD softness while UK data – house prices, consumer credit held up. GBP was last at 1.5320 levels. 4-hourly momentum and stochastics suggest some signs of upside bias intra-day. Resistance at 1.5340 – 1.5350 levels (38.2% fibo and 21, 50, 200 DMAs). Support remains at 1.5260 (61.8% fibo retracement of Oct low to high), before 1.52 (76.4% fibo) and 1.51 (Oct lows). May see intra-day range of 1.53 – 1.5360. No data for the day to focus on. GfK Consumer Confidence (Oct) released just this morning was weaker than expected.

      USD/JPY – D-Day For BOJ. Eyes remain on BOJ, Kuroda presser and semi-annual outlook this afternoon. USD/JPY is retracing this morning, ding-donging around the 121-figure on the back of softer dollar overnight and ahead of the BOJ meeting this afternoon. Currently seen around 121-figure, intraday momentum indicators are still mildly bullish bias, and stochastics is fast approaching overbought territory. This suggests that downside could be limited ahead. Still, moves this morning ahead of the BOJ meeting is likely to be rangy with the pair hover within 120.85-121.25. The mixed CPI data out this morning has not provided any clarity on how the BOJ will move later. Overall consumer inflation saw no growth in Sep, within market expectations but was worse than the 0.2% posted in Aug. More importantly, core inflation (which is consumer prices excluding fresh food) continued to fall, down by 0.1% y/y in Sep at a pace similar to Aug, but better than the -0.2% expected by the market. Core core inflation which is core inflation minus energy (apparently the new inflation gauge favoured by the BOJ in recent times) rose by 0.9% y/y in Sep from 0.8% in Aug. Nevertheless, market remains split over any BOJ moves, though our long-held view remains for the BOJ to add to its easing measures given the lack of inflationary pressures amid sluggish growth. No moves by the BOJ could see the pair head back below the 120-figure at 119.70 (38.2% Fibo retracement) before the next at 118.60. Additional easing measures could see the pair extend towards the 122-figure ahead of 123.15 (76.4% Fibo retracement).

       AUD/USD – Bearish. AUD touched a low of 0.7068 overnight before rebounding this morning, led higher by 3Q PPI this morning, up 0.9%q/q compared to 0.3% and was back at the 0.71-figure as we write. MACD shows increasing bearish momentum and next support is seen around 0.7040. Rate cut bets soared after the 3Q CPI softened unexpectedly though that has pared after Fed placed rate hike option back on the table. Fresh resistance is seen around 0.7120/31 region marked by the base of the ichimoku cloud and the 50-DMA. The higher 3Q PPI has eased concerns that excess capacity in Australia would corner RBA to a rate cut. While we think that recent developments of higher mortgage rates and lower underlying inflation have tilted the risks towards a cut, we hold our view that RBA will rush into the decision next Tue (3 Nov) as retail sales, consumer confidence, business confidence are still intact.  We think RBA would rather save precious ammunition until the economy shows further signs of distress.

       USD/CAD – Settling into Range? USDCAD remains on the retreat, pressurizing the base of the ichimoku cloud and printed 1.3145 at last sight. Pair is guided by the softer USD. Next support is seen at the conversion line of the ichimoku cloud at 1.3108. A break here could suggest two-way trades ahead within wider range of 1.2990-1.3300. Daily MACD shows some deceleration in bullish momentum. Industrial product slipped more than expected by -0.3%m/m in Sep. Aug growth numbers are due tonight and consensus expects a slower growth in the month of 0.1%m/m vs. previous 0.3%.

      NZD/USD – Upside Risk Intra-day.  NZD remains well-bid on news that China scraps 1-child policy (now allows 2 children per couple) and Oct business confidence/activity outlook data (released just this morning). NZD was last at 0.6730 levels ) nearing the intra-day high). We remain overall bearish bias in the pair but cautioned for some upside risk intra-day ahead of BoJ meeting (which could see another jab of monetary easing supporting sentiment). 4-hourly momentum and stochastics are also indicating some bullish bias, intra-day. Upside could re-visit 0.6750 (50% fibo of 0.6866 – 0.6623) before 0.68 levels (76.4% fibo). We suggest fading into these rallies (with s/l above 0.6870) for a move back below 0.67-handle.

Asia ex Japan Currencies

      The SGD NEER trades 0.50% below the implied mid-point of 1.3943 with the top end estimated at 1.3662 and the floor at 1.4223.

        USD/SGD – Rangy. After climbing to a recent high of 1.4073 overnight, the USD/SGD has retraced back towards the 1.40-handle this morning, underpinned by the softer dollar tone. Last seen around 1.4005, pair is still bullish bias as indicated by both intraday momentum indicators and oscillators. Stochastics though is tentatively falling from overbought levels, suggesting that range-bound trades could be likely intraday. BOJ meeting later this afternoon will be eyed for directional clarity. Support is seen around 1.3975 (21DMA) before 1.3940 (100DMA) while resistance is around 1.4060 (200DMA).

       AUD/SGD – Downside Bias. AUDSGD waffled around 0.9950. RSI flags oversold conditions and we expect that further slides might meet support at 0.9890. Bias is still to the downside as MACD shows increasing bearish momentum. Parity could be a resistance to cap upmoves ahead of the next at 1.0050.

       SGD/MYR – Range of 3.06 – 3.08 Expected Intra-day. SGD/MYR continues to be well supported above its 50DMA. Cross was last seen at 3.0730 levels. Weekly/ daily momentum remains flat with some tentative signs of bullish bias. Next resistance at 3.0970 levels (Oct high). Support remains at 3.0370 (21 and 50 DMAs). Expect 3.06 – 3.08 range intra-day.

       USD/MYR – Range-Bound; Upside Risks. USD/MYR continues to stay supported. Last seen around 4.30 levels. Daily momentum and stochastics continue to exhibit tentative signs of mild bullish bias. Resistance at 4.3170 (23.6% fibo retracement of Jul low to Sep high). Support at 4.27 (50 DMA). Expect the pair to consolidate in 4.27– 4.32 range. We caution that a break above 4.32 could see the pair push higher towards 4.38 levels. 

       1s KRW NDF – Watch External Event - BoJ. 1s KRW was around 1149 highs overnight (before US GDP release) before its decline, tracking a weaker USD post-US GDP release. Pair was last seen at 1139 levels. Daily momentum and stochastics continue to indicate a mild bullish bias. Support at 1129 (200 DMA) is expected to hold. Better buyers on dips. Day ahead the key event outside Korea to watch out for is BoJ meeting – further monetary easing could see USDJPY higher and lead USDKRW higher. 

       USD/CNH – Slamdunk! USD/CNH was sold below the 6.35-figure and was last seen around 6.3410. There were whispers of the pair being sold aggressively by Chinese names. 100-DMA at 6.3265 comes into focus and that is the support eyed. The 6.4060-barrier (50DMA) has deterred bullish attempt. Spread between CNH and CNY diminished yesterday, ahead of the SDR review and CNH is now trading at a premium to CNY of around 150pips against the USD. USD/CNY was fixed 101 pips lower at 6.3495 (vs. previous 6.3596). CNY/MYR was fixed 41 pips higher at 0.6732 (vs. previous 0.6691). The state media said that China will still target medium to high growth rate for the next five years. China will also allow two children per couple to combat anti-aging.

       SGD/CNY – Bearish Risks. This cross found support at the 50-DMA (4.5210) and was last priced at 4.5400. Momentum is still bearish with resistance at 5.440.Risks are still to the downside within the established 4.52-4.62 range in the near term.

       1s INR NDF – Steady. 1s USDINR remained on the upside bias, last seen around 65.60. Resistance remains at 66.08, marked by the 50-DMA. MACD on the daily chart shows increasing upside momentum that could keep the pair to the upper bound of the 64.80-66.10 range. A more unlikely bearish breakout exposes 200-DMA at 64-figure. Wed saw foreigners sold USD82.5mn of equities and USD86mn of bonds. Finance Ministry announced that it will include proposals in the Finance Bill 2016 to provide a tax exemption on capital gains arising from offshore rupee-denominated bonds (Bloomberg). A withholding tax will apply to rupee-denominated bonds issued to non-resident investors.

       USD/IDR – Consolidating. USD/IDR is inching lower this morning in line with its regional peers. Pair though remains in consolidation within its 13350-13810 trading range. Pair is currently seen around 13610 with intraday momentum indicators still bullish bias, though stochastics is showing no strong bias. Expect the pair to remain in consolidative mode ahead until there is directional clarity. Support is still seen around 13460 and resistance around 13700. After climbing to an overnight high of 13975, the 1-month NDF appears to be in consolidative mode with the NDF seen hovering around 13802 currently. Intraday MACD and stochastics are still both showing no strong bias. The JISDOR was fixed lower at 13562 yesterday from Wed’s 13630. Risk appetite for Indonesian equities continued to wane for the second straight session with foreign funds selling a net USD73.92mn of equities. Meanwhile, foreign funds added a net IDR1.94tn to their outstanding holding of government debt on 28 Oct (latest data available).

       USD/PHP – Limited Downside.  USD/PHP is on the slide this morning, tracking the USD/AXJs broadly lower. Pair is seen around 46.865 with intraday MACD still showing bullish momentum and stochastics at overbought levels. This suggests that downside could be limited ahead. There is unlikely to be much relief for the pair as BOJ meeting is on tap later today. Further dips are likely to be limited around 47.700 while rebounds are likely to be capped around the 47-figure 1-month NDF climbed back above the 47-figure yesterday but is currently inching lower at around 47.100 with intraday MACD still showing no strong momentum, and stochastics tentatively falling from overbought levels. The sell-off in equities continued with foreign funds selling a net USD48.527mn in equities yesterday.

      USD/THB – Two-Way Moves.  USD/THB hit an overnight high of 35.730 before easing back towards the 35.600-handle this morning, weighed by the softer dollar tone. Trades this morning could be cautious ahead of the BOJ meeting later. Pair is currently hovering around 35.608 with intraday MACD still showing bullish momentum though stochastics is tentatively turning lower. This suggests the possibility that the pair could trade two-ways ahead. Support is seen around 35.550 (21DMA) while barrier is around 35.830 (200DMA). Risk appetite for Thai assets was mixed yesterday with foreign funds still selling equities to a tune of a net THB2.90bn but buying a net THB1.51bn in government debt, though net-net the impact was THB-negative yesterday. Today is data-heavy with the usual month-end data releases of Sep Mfg production index; Sep Trade; Sep current account balance; and 23 Oct foreign reserves on tap.

Rates

Malaysia

      Government bond market opened softer on the back of hawkish FOMC statement. MGS yield curve ended 1-3bps higher, with most trades done on the 7y benchmark. Market also saw the auction on new 20y GII 10/35 which drew a good bid/cover of 2.441x on a smaller than expected issuance size of MYR1.5b and successful yields averaged 4.786%. Post auction the bond was quoted within 4.78/74% but nothing traded.

       In choppy trading, IRS started with better bid after the hawkish FOMC. There were no trades reported and the curve closed higher by 1-3bps. 3M KLIBOR remain unchanged at 3.74%.

       Local PDS market was very quiet with bids dried up. Short-dated Celcom papers traded unchanged. In the AA space, TTPC 21s were given at 4.55% while WCT 21s tightened 23bps. Other trades appear to be cross trades for portfolio rebalancing.

Singapore

      SGS tumbled, tracking the overnight UST movement after the hawkish FOMC statement. Selling interest seen in short-dated SGS while long-dated ones saw buying on dips, hence the bear flattened yield curve with yields up 3-4bps and +6bps around the 2y. But intermittent selling interest was seen at the long end towards the close. SGD IRS ended higher 2-5bps and swap spreads narrowed about 2bps.

       Asian CDS opened slightly wider, by 2-3bps on average, with more players opting to reduce risk in Asian credits. INDON sovereigns traded 0.5-1pt lower while quasis held on. The CITPAC curve tightened further by 2-3bps. Other IGs were rather muted, mostly unchanged with decent two way interest supporting the market. Tech and O&G names however saw more sellers. China General Nuclear Power Corp’s subsidiary, China Clean Energy Development (Baa1) is issuing 10y USD paper guiding for T10+220bps.

Indonesia

      Indonesia bond market closed negative as Fed gave a rather hawkish statement as they made it apparent that it can raise rates in Dec. Post market close, there were statement given by government official that the government is seeking for around $5 bn loan to cover 2.5% budget deficit without further explanation whether they are going to issue more government bond or borrowing through the standby lender. Q3 15 U.S. GDP annualized QoQ came in 1.5% slightly below expectation of 1.6%. This might help bond prices to incline slightly. Aside from this, the 2016 budget is in discussion and several fundamental numbers have already been approved. However, today will be the last day for the legislative to pass the 2016 budget. 5-yr, 10-yr, 15-yr and 20-yr benchmark series yield stood at 8.626%, 8.659%, 8.946% and 8.963% while 2y yield shifts up to 8.286%. Trading volume at secondary market was seen moderate at government segments amounting Rp10,560 bn with FR0056 as the most tradable bond. FR0056 total trading volume amounting Rp2,455 bn with 57x transaction frequency and closed at 97.843 yielding 8.683%.

       Corporate bond trading traded heavy amounting Rp667 bn. ASDF02BCN3 (Shelf registration II Astra Sedaya Finance Phase III Year 2014; B Serial; Rating: AAA(idn)) was the top actively traded corporate bond with total trading volume amounted Rp72 bn yielding 9.205%.