TMB Bank Priced 5.5y Senior at T+170bps; BNM Expects Growth to Moderate

24 March 2016

Credit Markets Update

           

TMB Bank Priced 5.5y Senior at T+170bps; BNM Expects Growth to Moderate

¨      APAC USD Credit Markets: Asian CDS and IG spreads tightened 1-2bps to 149.7bps and 216.8bps respectively, while HY was unchanged at 7.66. Meanwhile, Treasuries also gained as benchmark yields narrowed by 4-7bps with 10y at 1.88% on the back of a decline in Brent oil price by 3.2% to USD40.5/bbl and drop in US equities. Primaries saw TMB Bank (Baa2/BBB-/BBB-) priced USD300m 5.5y senior at T+170bps vs. IPT+200bps area and Yunnan Provincial Investment (NR/NR/BBB+), one of China’s local government financing vehicles (LGFV), issued USD300m 3y at T+240bps vs. IPT+270bps area.

¨      SGD Credit Markets: ABN AMRO prints SGD. The short-to-mid swap curve rose by 1.5-2.5bps, with the 2y and 5y closing at 1.67% and 2.04% respectively. There was interest in financial papers such as BNP and STANLN B3T2 ahead of the ABNANV print, as well as NOLSP, GGRSP and OLAMSP as oil prices have steadied above the USD40/bbl level. ABN AMRO issued a SGD450m 10NC5 B3T2 (Baa3/BBB-/A-) at 4.75%, with BTC close to 2x. Meanwhile, Singapore’s Feb CPI came in lower than expected at -0.8% (consensus: -0.7%), which may weigh investor’s expectations towards an easing stance in the April MAS monetary policy meeting. Looking ahead, the Feb Industrial Production numbers are to be released today (consensus: -1.50%; Jan: -0.5%).

¨      MYR Credit Markets: Strong BTC of 3.2x for the new MYR4bn 10.5y GII. The new 10.5y GII 9/26 was priced at 4.07% with strong BTC of 3.2x. The bullish auction drove bargain hunters into the previous 10y GII 10/25 benchmark which ended the day 2bps lower at 4.10%. USDMYR continued the strengthening trend to 3.99, while Malaysia’s 5y CDS recouped to 159bps, from the high of 163bps this week. Corporate market was traded moderately with MYR479m exchanged hands. Most active was SEB 6/16 fell 3bps to 3.76% on MYR80m trades. Meanwhile, BNM in its briefing yesterday forecasted Malaysia’s GDP growth to moderate to 4-4.5% in 2016 while highlighting the heightened downside risks to growth and volatility ahead; higher inflation outlook of 2.5-3.5% (2015: 2.1%) due to the higher administered item prices and weak MYR; along with weakening unemployment outlook of 3.3-3.5% (2015: 3.2%). Nevertheless, financial stability remain intact where banking system is well-capitalized to withstand key risks such as high household debt, slowdown of property market, rising corporate leverage and volatile market conditions.