Thursday, November 5, 2015

FW: RHB FIC Credit Market Monthly Review - 5/11/15

RHB FIC Credit Market Monthly Review - 5/11/15

5 November 2015


Credit Market Monthly Review
October 2015

Market Soars on Doves Fondness, but the Hawk Preys   

Market Review
¨   APAC USD: Asian CDS comforted by PBoC rate cut and possible bigger QE by ECB; APAC IG capped a better performance with corporate spreads slashed 20bps to 152bps; HY credits benefitted from overall bullish sentiments with yields narrowing 1.5pp to 8.90%.
¨   SGD: Low-beta property names in focus post-MAS mild easing move; High-Yield (HY) issuers seek consent to loosen covenants; Trikomsel on the verge of default.
¨   MYR: Ringgit bonds back to life as market stabilized; Government bonds ended firmer; Budget 2016 leaves little margin for error.

Flows and Issuance Trends
¨   USD: Pick-up in primary as credit markets sentiment improve.
¨   SGD: Property issuances aplenty in October.
¨   MYR: Primary space flooded with banks/FIs as monthly issuance tripled to MYR10.6bn.

Sector Highlights
¨   MY Banking – Banking system stayed healthy, loan growth expected to moderate ahead.
¨   SG Banking – Flattish profit growth, asset quality worsened.
¨   CH Banking – Compression in NIM while asset quality generally deteriorated; Big Five* banks continue to exhibit strong capitalization.
¨   SG Property – Positive earnings from REITs as defensive credits.

Rating Trends
¨   Upgrade of Korean SOEs drives upgrade/downgrade ratio higher in October.

Outlook
¨   Easing measures by central banks to keep bond performance afloat.

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