Monday, October 19, 2015

Credit Market Watch: Summary for week ending 16-Oct

Credit Market Watch: Summary for week ending 16-Oct
·         MYR Credit:
Ø  MGS yields lower by 3-5bps WoW on better buying. Demand was also seen for high grades at the belly and long end in the PDS space, with activity picking up slightly from the week before. But trades done were largely on short-dated credits.
Ø  Relative value: YTL Corp'23 last traded 26bps above our AA1/AA+ fitted line but volume was below-standard odd amount. We think Telekom'23 offers some upside, last dealt at 4.60% which offers some pickup at the 8y.
Ø  Updates: DUKE Phase 2 construction is 66.8% completed and Ekovest is going ahead with construction of DUKE Phase 3, which will cost MYR3.5b, despite lower traffic volume anticipated after the toll rate hike. Sarawak Energy's subsidiary Sesco could be signing an agreement to supply power to Malaysian Phosphate Additives (Sarawak) Sdn Bhd by December.
·         Asian USD Credit:
Ø  The sluggishness of US data and divided views of Fed members saw the odd of seeing a FFR hike down to about 32%. Asian credit tightened slightly, with JACI composite -2bps, JACI IG -2bps and JACI HY -5bps.
Ø  Sovereigns did not rally as much as the week before but in general still edged up 0.5-1pt. In yield term, INDONs were better by 10-15bps, PHILIPs by 6-14bps and MALAYS by 10-13bps WoW. OGIMK'23 performed pretty in line with MALAYSs.
Ø  Chinese financial and tech names saw demand from real money players such as BIDU 25, BABA 24, TENCNT 25 and LENOVO 19 moving 5-15bps tighter late week. New issuance Meiji Yasuda Life Insurance issued a 30NC10 at par and opened almost 2pts up.
Ø  On HY, there was strong demand on property names on the back of real money and PB flows with some papers rallying 1-3pts WoW.
Ø  Rating changes: Parkson Retail's rating was downgraded to B+ from BB- with a negative outlook, citing continued deterioration in core business and rising leverage as its China-based department store face weaker consumer spending and competition from other retail formats.
·         CDS: Regional CDS spreads continued to tighten on better risks sentiment led by Indonesia which tightened 10bps, followed by Thailand -8bps, Malaysia -6bps and Philippines -6bs.

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