AsianBondsOnline Newsletter (14 June 2016)

To read the full report, data and graphs go to http://www.asianbondsonline.adb.org/newsletters/abowdh20160614.pdf?src=newsletter&id=uWidK3KdmgXVUWes9IgIcqKp1miwxx

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News Highlights - Week of 6 - 10 June 2016

The Bank of Korea’s Monetary Policy Board decided on 9 June to lower the base rate by 0.25 percentage points to 1.25% from 1.50%. In its monetary policy meeting, the board noted that economic growth in the Republic of Korea will remain modest but downside risks are increasing. The board also said that it will ensure that the Republic of Korea continues its economic growth recovery and that consumer price inflation approaches its target level over the medium-term.

*     The People’s Republic of China’s (PRC) consumer prices rose 2.0% year-on-year (y-o-y) in May after gaining 2.3% y-o-y in April.  Producer prices showed a slight recovery, falling 2.8% y-o-y in May after declining 3.4% y-o-y in April. Consumer price inflation in the Philippines accelerated to 1.6% y-o-y in May from 1.1% y-o-y in April.

*     Based on second preliminary estimates, Japan’s real gross domestic product grew by an annualized 1.9% in the first quarter of 2016, 0.2 percentage poinst higher than the first preliminary estimate of 1.7%. Industrial production growth in Malaysia rose to 3.0% y-o-y in April from 2.8% y-o-y in March. The increase was driven by the larger annual increase in the electricity sub-index of 9.4% y-o-y in April compared with 7.7% y-o-y in March.

*     The PRC’s exports fell 4.1% y-o-y and imports fell 0.4% y-o-y in May in USD-denominated terms.  The PRC reported a trade surplus of USD50.0 billion in May. The weaker exports in May were due to falling demand from the United States and Asia. Philippine merchandise exports fell 4.1% y-o-y in April following a 15.1% y-o-y drop posted in March.

*     Japan’s current account surplus narrowed to JPY1.9 trillion in April from JPY3.0 trillion in March. This was primarily due to the services account deficit of JPY401 billion recorded in April, a reversal from the surplus of JPY243 billion in March.

*     Corporate debt issuance in the Republic of Korea soared 103.3% month-on-month (m-o-m) to KRW14.4 trillion in April, according to the Financial Supervisory Service.

*     Citic Limited last week priced a USD1.25 billion dual-tranche bond comprising a USD500 million 5-year tranche priced at a coupon rate of 2.8% and a USD750 million 10-year tranche priced at a coupon rate of 3.7%. China State Construction Engineering also priced a USD1 billion dual-tranche bond comprising a USD500 million 3-year tranche priced at a yield of 2.34% with a coupon rate of 2.25% and a USD500 million 5-year tranche priced at a yield of 2.751% and a coupon rate of 2.7%. Tianjin Infrastructure Construction and Investment priced a USD500 million 3-year bond at a yield of 2.8015% and a coupon rate of 2.75%.

*     The Government of Indonesia sold a total of EUR3 billion from a dual-tranche offering last week. The issue comprised a EUR1.5 billion 7-year bond priced to yield 2.772% with a coupon rate of 2.625% and a EUR1.5 billion 12-year bond priced to yield 3.906% with a coupon rate of 3.75%.

*     Local currency government bond yields fell for all tenors in the Republic of Korea, Malaysia, and Singapore, and for most tenors in Hong Kong, China; Indonesia; the Philippines; Thailand; and Viet Nam, tracking the decline in US yields. Weaker than expected US payroll data released last week point to a further delay in US rate hike by the US Federal Reserve. The spread between the 2- and 10-year yields narrowed for most market except for Hong Kong, China; the Republic of Korea; Malaysia; and the Philippines. 

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