Sinopec Priced USD3bn to Refinance Debt; S&P Upgrades Tencent’s Outlook to Positive

26 April 2016

Credit Markets Update

           

Sinopec Priced USD3bn to Refinance Debt; S&P Upgrades Tencent’s Outlook to Positive

¨      APAC USD Credit Market: Market cautious before the FOMC and BoJ meeting this week with the IG credit spread and iTraxx AxJ settling 1-3bps higher at 210.2bps and 140.7bps respectively, while yields for non-IG bonds rose 7bps to 7.42%. Benchmark USTs continued the upward trend with the 10y closing 2.5bps higher to 1.91% while US new home sales in Mar was slower at 511k, from 519k in the previous month. In the primary market, Sinopec Group Overseas (Aa3/A+/NR) sold USD3bn to refinance its debt, separated over 4 tranches - 3y at +120bps, 5y at 142.5bps, 10y at 170bps and 30y at 153.5bps. Meanwhile, Jingrui Holdings, a property developer in China, was downgraded by Fitch to B-/Neg, from B, reflecting its high debt level, tight liquidity and cash flow. Elsewhere, S&P revised Tencent Holdings’ outlook to A/Pos on the back of its solid progress in monetizing user traffic on its online platform via advertisement and online gaming.

¨      SGD Credit Market: Sembcorp pursues legal suit against Sete Brasil. There was a mild steepening in the short-to-mid curve, with the 2y falling by 1bp to 1.64% while the 5y rose by the same degree to 2.04%. The better oil prices (USD44.5/bbl yesterday) spurred risk-on sentiment in HY names like BTHSP, KRISSP and SWIBSP. Meanwhile, Sembcorp Marine (NR) announced that it has commenced legal proceedings against the embattled Sete Brasil, which Sembcorp has an outstanding orderbook of SGD3.2bn (30% of total orderbook). Yesterday’s Singapore March CPI came in weak at -1.0% in line with consensus as investors will be eyeing the March Industrial Production (consensus: -2.0%) to be released this afternoon.

¨      MYR Credit Market: Govvies moved sideways with the 3y MGS tightening 2bps to 3.25% while 5-10y MGS closed flat-to-2bps wider at 3.42% (+2bps), 3.74% (+1bps) and 3.81% (+2bps) respectively. On the corporate space, the newly issued Gamuda 4/21 and MAHB Pc12/24 were among the most traded papers, which ended at 4.60% (-2bps) and 4.983% (+0.7bps) on combined trades of MYR140m. The latter was followed by MAHB’s announcement that it was targeting a c.40% increase in passengers to 155m annually in 2020 from 112m in 2015. Elsewhere, MGS auction of 7-year re-opening is likely to be announced today with consensus issue size of MYR3-3.5bn and expected WI of 3.7-3.8%.