¨ Greenland HK 7.5x Oversubscribed; Jambatan Kedua Priced MYR2.6bn 7-25y Sukuk @ 3.91-4.86%

22 July 2016

Credit Markets Update

¨      Greenland HK 7.5x Oversubscribed; Jambatan Kedua Priced MYR2.6bn 7-25y Sukuk @ 3.91-4.86%

APAC USD Credit Market: Asian bond markets stood firm. IG spreads edged lower by 1.2bp to 199.6bps, while average non-IG bond yields and the iTraxx AxJ remained steady and unmoved at 6.35% and 120bps respectively as Asian stock markets settled higher. Investors piled into USTs whereby yields strengthened 1-4bps across the curve amid the slip up in US equity markets and declining oil price (Brent: -2.1% to USD46.2/bbl) despite better June Existing Home Sales print which grew 1.1% to 5.57m (consensus: -0.9%; prior: 1.8%) and initial jobless claims at 253k against consensus of 265k. On the other hand, Greenland HK (Ba2/BB-/NR) received 7.5x BTC for USD450 3y bonds at 4.125%; IPT at 4.625% area. ANZ (Aa2/AA-/AA-) priced USD750m 5y bond at T+105bps (IPT +125bps) and USD250m 5y FRN at 3mL+101. China Railway (A3/A-/BBB+) sold USD500m 10y bonds at T+170bps against IPT+205. In the pipeline, China Development Bank (Aa3/AA-/A+) plans investor roadshows in Hong Kong and Singapore from today for USD bonds.

¨      SGD Credit Market: Ezra’s subsidiary wins Saudi Aramco project; Investors eye Monday’s CPI release. There was a rise in the short-to-mid swap curve, with the 2y rising by 3.6bps to 1.43% while the 5y increased by 5.1bps to 1.72%. Keppel Corp’s 2Q16 net profit fell 47% to SGD219m largely due to the 46% drop in revenue contribution (to SGD720m) from its O&M space. In addition, its orderbook fell to SGD4.3bn (from SGD8.6bn in 1Q16) as Sete Brasil’s orderbook portion has been excluded as it has filed for judicial recovery. Ezra’s 50% owned subsidiary Emas Chiyoda is part of a consortium that has won a USD1.6bn bid with Saudi Aramco to provide engineering, procurement and construction services, with Ezra’s direct portion estimated to be around USD320m. Looking ahead, investors will be eyeing the Singapore June CPI to be released on Monday (consensus: -1.1%; May: -1.6%).

¨      MYR Credit Market: CIMB Bank priced MYR1.35bn sub-debt at 4.77%; CIMB Thai’s NPLs increased to 4.3% in 2Q16. The MGS rose 6-8bps across the 5-10y benchmarks on muted trading session as investors were focusing on the MYR3.5bn 5y GII Reopening. The 5y auction received good demand of 2.45x BTC, concluding at average yield of 3.401% which is 34bps lower than the similar issuance in Feb. MYR closed 0.3% weaker at 4.0390/USD while Malaysia CDS increased 3bps to 134bps. In the corporate market, CIMB Bank printed MYR1.35bn 10nc5 sub-debt (AA2) at 4.77%. Its subsidiary, CIMB Thai, registered 5.5% YoY higher YTD net profit for 2Q16. Nevertheless, provisions were 17% YoY on the back of its rising NPL to 4.3% in 2Q16, from 3.1% in FY15. Jambatan Kedua (GG) priced MYR2.6bn Sukuk, separated over 7y-25y at final guidance of 3.91%-4.86%. Secondary flows were slower at MYR506m with Prasarana 2/23 (-11bps) and Gamuda ‘18s (-12 to -13bps) among the top gainers.