Markets Brace for US Jobs Data; OPEC Status Quo; GovCo priced MYR1.25bn IMTN

3 June 2016

Credit Markets Update

Markets Brace for US Jobs Data; OPEC Status Quo; GovCo priced MYR1.25bn IMTN

¨      APAC USD Credit Market: Credit markets little change ahead of US May NFP print as iTraxx AxJ was marginally wider at 142.3bps, while IG credits spreads and average HY bond yields was up 0.6-1.6bps to 210.2bps and 7.06% respectively. Benchmark USTs strengthened, with yields falling 1-4bps across the curve with the 10y settling 4bps lower to c.1.80% amid stronger performance in US equities and oil markets as Brent climbed 0.6% to USD50/bbl. On ratings, Moody’s cut Hong Kong’s Nanyang Commercial Bank rating to A3 from A1; outlook remains negative to reflect expectations of a material increase in the bank’s risk profile as it aggressively grows its lending business in China and to reflect less support uplift from its new owner, China Cinda Asset Management.

¨      SGD Credit Market: Interest centered in quasi/ IG papers. There was a decline in the short-to-mid SOR curve by 1.5-2bps, with the 2y and 5y closing at 1.74% and 2.13% respectively. Interest seemed centered around quasi/ IG papers such as HDBSP, LTAZSP and LT2 DBSSP which were around 3-6bps tighter (according to Bloomberg). G8 Education announced that it has fully redeemed its SGD260m GEMAU 5/17 with its recently issued SGD270m GEMAU 5/19 while Keppel Corp stated that it is being sued by EIG Management with regards to the Sete Brasil scandal, alongside Sembcorp Industries and Sembcorp Marine.

¨      MYR Credit Market: Quiet trading session amid volatile MYR. Merely MYR155m traded in the corporate market and MYR1.95bn in the govvies market. The MGS curve steepened as 5y declined 2.6bps to 3.58% while the 10y rose 1.5bps to 3.94%. MYR weakened to the high of 4.17/USD, before closing at 4.1495/USD amid higher Brent price. Over to the corporate market, GovCo (GG) priced MYR1.25bn IMTN – 7y at 4.27%, 10y at 4.40% and 15y at 4.73%. Government-guaranteed bonds also fueled the secondary market with DanaInfra 5/36 exchanging hands at 4.769% on its debut trade, 0.9bps above coupon. BPMB 9/21 and 9/29 moved sideways to 4.021% and 4.557% respectively (-0.7bps to +0.3bps).