Crown Resorts and Tata Power under Rating Pressure; CDB Issued USD1bn Senior; IsDB to Print MYR Sukuk

17 June 2016

Credit Markets Update

Crown Resorts and Tata Power under Rating Pressure; CDB Issued USD1bn Senior; IsDB to Print MYR Sukuk

¨      APAC USD Credit Market: Chinese issuers flooded the primary space after China Development Bank (CDB) printed a USD1bn 3y Senior at 1.625% or +90bps (IPT: +105bps) while Zhongrong (NR/BB-/NR) priced USD500m 3y at 6.95% (IPT: 7.15%). Meanwhile, Moody’s and S&P placed Crown Resorts Ltd on downgrade review pursuant to its proposed demerger of international assets and increased dividend payout which will reduce the Group’s retained cash flow and asset base. Tata Power was placed on negative outlook by Moody’s following the announcement to acquire Welspun Renewables Energy Ltd for INR92.5bn which will be funded by additional borrowings. Credit markets ended mixed with the IG credit spreads and iTraxx AxJ widening 3-4bps to 224.8bps and 150.3bps respectively, while the HY decreased 1bp to 6.95%.

¨      SGD Credit Market: Quasi names closed tighter; NODX positive surprise.  The status quo Fed led to the decline in short-to-mid SOR curve by between 7-9bps, with the 2y and 5y closing at 1.57% and 1.87% respectively. Quasi names such as HDBSP and LTAZSP appeared tighter by 5-8bps (according to Bloomberg) as well as yielder names like GRCHAR and DMHLSP. First REIT announced that the Indonesia land office has extended the title for its Siloam Kebon Jeruk Hospital by another 20 years. Meanwhile, Singapore May NODX came in this morning at a surprise 11.6% (consensus: -1.6%; Apr: -7.9%) largely from growth in non-electronic exports (prefabricated buildings, pharmaceutical).

¨      MYR Credit Market: Islamic Development Bank (IsDB) to issue new Sukuk. MARC has assigned a preliminary rating of AAA to the MYR400m Proposed Sukuk Wakalah by Tamadun Services Bhd, a SPV under the Organization of Islamic Cooperation’s multilateral development bank, IsDB (AAA). The secondary market was active at MYR753m led by GG and AAA bonds. Notably, Khazanah 2/21 declined 13bps to 3.821% with MYR135m done, while Cagamas ‘20-’23 crossed 1-9bps lower at 3.96%-4.218%. Over in the govvies, the MGS curve steepened as the 3y benchmark declined 1bp to 3.24%, while 10y stayed flat at 3.88%. The MYR was volatile throughout the day before closing slightly weaker at 4.1005/USD (+0.04%).