Malaysia Printed USD1.5bn Sukuk; CIMB Group Established New AT1 Programme

21 April 2016

Credit Markets Update

           

Malaysia Printed USD1.5bn Sukuk; CIMB Group Established New AT1 Programme

¨      APAC USD Credit Market: Asian Credits markets weakened with IG credit spreads and speculative bond yields rising 1.9-5bps to 216.1bps and 7.39% respectively, while the iTraxx AxJ was marginally higher at 138.7bps, taking cues from the weaker regional Asian equities market. Over to Treasuries, benchmark yields rose across the curve by c.3.6-6.5bps as the 5y and 10y jumped c.6bps to 1.31% and c.1.84% respectively, following the surge in Brent price to USD45.8/bbl and as US and European equity markets extended gains. Turning to the primary front, BOC Aviation (NR/A-/A-) sells its USD750m 10y bond at T+215bps vs. IPT of 235bps area, whereas Hongkong Electric (NR/A-/NR) may price its benchmark USD 10y bond later today, with IPT of 135bps.

¨      SGD Credit Market: Ezra’s consent solicitation approved; Perennial prints 4y. The short-to-mid curve saw mild flattening, with the 2y rising by 0.8bps to 1.56% while the 5y was unchanged at 1.91%. We observed interest in names like GALVSP, PREHSP and SCISP. Ezra Holdings (NR), an O&G player, saw 2QFY8/16 revenue fall by 14% to USD111m, while registering a net loss of USD252.8m. Its EBITDA came in at –USD64m, though it has avoided a default on its sole outstanding EZRASP 4/18 after it received consent to loosen its covenants again (after a similar exercise in Nov-2015), such that EBITDA Interest Coverage is waived as long as monies are deposited into an interest service reserve account. In the primaries, Perennial Real Estate Holdings (NR) is printing a retail and institutional 4y tranche at 4.55%.   

¨      MYR Credit Market: MGS closed firmer with 10y fell 1bp to 3.80% as USDMYR strengthened 0.6% to 3.869 amid higher Brent price. Inflation in March eased to 2.6%, from 4.2% in the previous month, driven by the lower retail fuel prices. Malaysia sold its USD1.5bn Sukuk at T+135bps for 10y and T+145bps for 30y; while Gamuda (AA3) priced MYR300m 5y IMTN at 4.62% (MGS5y+122bps). Elsewhere, RAM assigned A1 rating to CIMB Group’s MYR10bn Proposed AT1 Programme; while UEM Sunrise’s MYR2bn ICP/IMTN Programme was assigned with preliminary rating of AA- by MARC. In the secondary market, Cagamas ‘16s-’20 moved -25bps to +24bps to settle at 3.40%-4.02% on combined MYR558m trades.