AsianBondsOnline Newsletter (28 March 2016)

To read the full report, data and graphs go to http://www.asianbondsonline.adb.org/newsletters/abowdh20160328.pdf?src=newsletter&id=uWidK3KdmgXVUWes9IgIcqKp1miwxx

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News Highlights - Week of 21 - 25 March 2016

Consumer prices in Hong Kong, China rose 3.1% year-on-year (y-o-y) in February after gaining 2.7% y-o-y in January. The rise was the result of the seasonal effects of the Lunar New Year, which drove up food prices. Consumer price inflation in Japan rose to 0.3% y-o-y in February from 0.0% y-o-y in January. In Malaysia, consumer price inflation rose to 4.2% y-o-y in February from 3.5% y-o-y in January, mainly due to larger y-o-y increases in seven out of the twelve sub-indices, led by food and non-alcoholic beverages. In Singapore, consumer prices fell 0.8% y-o-y in February after declining 0.6% y-o-y in January, due largely to declines in the cost of private road transport and accommodation. Meanwhile, consumer prices in Viet Nam climbed 1.7% y-o-y in March after rising 1.3% y-o-y in February, mainly driven by increases in the prices of medicine, health services, and education.

*     Bangko Sentral ng Pilipinas decided on 23 March to keep unchanged the overnight borrowing rate at 4.00% and the overnight lending facility rate at 6.00%. Interest rates on special deposit accounts and reserve requirement ratios were also maintained at current levels. The Bank of Thailand’s Monetary Policy Committee decided on 23 March to maintain the policy rate at 1.50%.

*     The Republic of Korea's real gross domestic product (GDP) growth stood at 3.1% y-o-y in the fourth quarter (Q4) of 2015 and 2.6% in full-year 2015, according to preliminary estimates of the Bank of Korea released last week. In Viet Nam, real GDP growth slowed to 5.5% y-o-y in the first quarter (Q1) of 2016 compared with 7.0% y-o-y growth in Q4 2015. The slower economic growth was due to redcued income from crude oil and agricultural production.

*     Manufacturing output in Singapore contracted 4.7% y-o-y in February after posting a revised 0.1% y-o-y growth in January. Four out of six manufacturing clusters recorded y-o-y declines in output.

*     The Philippines posted a USD2.6 billion merchandise trade deficit in January—a reversal from the USD603 million trade surplus in December. Total merchandise imports jumped 68.2% month-on-month (m-o-m) to USD6.8 billion, while total merchandise exports decreased 10.2% m-o-m to USD4.2 billion.

*     Last week, the Indonesian government raised USD2.5 billion from a dual-tranche sale of USD-denominated sukuk (Islamic bonds). The bond sale comprised US$750 million of 5-year sukuk priced at par with a profit rate of 3.4% and US$1.75 billion of 10-year sukuk priced at par with a profit rate of 4.55%. TMB Bank, based in Thailand, priced a USD300 million 5.5-year bond at a 3.108% coupon last week.

*     Yuexiu Transport Infrastructure, a Bermuda-incorporated company with business operations primarily in the People’s Republic of China (PRC), issued a CNY1 billion dual-tranche Panda bond on the PRC’s stock excahnge. The 5-year CNY300 million tranche has a yield of 2.85% and the 7-year CNY700 million tranche has a yield of 3.38%. Tisco Bank issued a THB5 billion 3-year debenture at a 1.95% coupon in Thailand last week.

*     LCY government bond yields rose for all tenors in Hong Kong, China; and for most maturities in Indonesia, Malaysia, and Thailand. On the other hand, yields fell in the PRC and Singapore and were mixed in the Republic of Korea, the Philippnies, and Viet Nam. The spread between the 2- and 10-year maturities rose for all emerging East Asian markets except for Singapore and Viet Nam where the spreads rose.

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