Risk Sentiment Improves; Sydney Airport, HK Electric, DanaInfra Priced Deals; Maybank Subdebt and Huawei Next in Pipeline

22 April 2016

Credit Markets Update

           

Risk Sentiment Improves; Sydney Airport, HK Electric, DanaInfra Priced Deals; Maybank Subdebt and Huawei Next in Pipeline

¨      APAC USD Credit Market: Positive market sentiment as iTraxx AxJ grinded lower by 1.4bps to 137.3bps while IG credit spreads and non-IG bond yields declined 3.1-4.5bps to 208.8bps and 7.35%, despite regional Asian equities market settling mixed. Turning to USTs, benchmark yields continue to rise with the 5y and 10y adding 1.6-1.8bps to 1.33% and 1.86% respectively, amid the apparent risk on sentiment and the better-than-expected US jobless claims print at 247k (consensus: 265k; prior: 253k). In the primaries, Hongkong Electric (NR/A-/NR) priced its USD750m 10y bond at T+112.5bps vs. IPT of 135bps area (BTC: 3.3x), in addition to that, Sydney Airport (Baa2/BBB/NR) sold USD900m 10y at T+175bps vs. IPT of 200bps. Elsewhere, Maybank (A3/A-/A-) may price its benchmark USD 10.5NC5.5 B3T2 notes, with an IPT of T+280bps. In the pipeline, Huawei (Unrated) plans investor meetings in the week ahead in Asia and Europe.

¨      SGD Credit Market: Guocoland’s weak quarterly performance; CPI print on Monday. There was a strong widening in the short-to-mid curve, with the 2y and 5y rising by 8-11bps to close at 1.64% and 2.02% respectively as the USDSGD appreciated by 0.4% to 1.349. Interest was seen in REITs such as AREIT, MAGIC and FCTSP following Perennial new issue of 4y at 4.55% yesterday. Guocoland’s 3QFY6/16 revenue dipped 49% YoY to SGD166m partially due to a one-off sale of the Shanghai Guoson centre in 3QFY6/15, while net profit declined by 75% to SGD12.7m. Looking ahead, investors will be eyeing the Singapore Mar CPI (consensus: -1.1%).

¨      MYR Credit Market: MGS curve flattened as the 3y rose 2bps to 3.25%, while 10y fell 2bps to 3.78%. USDMYR weakened 0.4% to 3.8855 as the greenback gained on higher oil prices which reinforced the probability of Fed hike this year. Turning toward the corporate market, DanaInfra (GG) priced MYR1.8bn IMTN ranging 7y-20y – 7y at 4.10%, 10y at 4.29%, 15y at 4.57% and 20y at 4.76%. Pavilion REIT (NR) printed MYR75m 5y MTN at 4.85%. Secondary market moved sideways – notably, DanaInfra 11/22 rose 1bp to 4.059% while Prasarana 2/31 declined 2bps to 4.588%.