¨ APAC USD Credit Market: Flattish Asian credits markets as investors remained cautious ahead of the upcoming Jackson Hole Symposium as the speech by the Fed Chair Janet Yellen will be closely watched. IG spreads were unchanged at 184.8bps, while speculative bonds were

25 August 2016

Credit Markets Update

ASL Marine Issues Profit Guidance; Vanke’s Outlook On Negative

¨      APAC USD Credit Market: Flattish Asian credits markets as investors remained cautious ahead of the upcoming Jackson Hole Symposium as the speech by the Fed Chair Janet Yellen will be closely watched. IG spreads were unchanged at 184.8bps, while speculative bonds were marginally lower at 6.24%. The iTraxx AxJ IG hovered at the 111.3bps level. Similarly, USTs traded range bound with the 2y adding 2bp to 0.76%, while the 10y yields increased 2bp to 1.56%. Elsewhere, Chinese property player, Xinyuan Real Estate (NR/B/B) priced USD300m 3y bonds at 8.125% against IPT of 8% area with strong interest from fund managers (82%). On ratings, China Vanke’s BBB+ rating was affirmed by S&P. The outlook has been slashed to negative from stable due to the increasing likelihood of tension among key shareholders and management which could be detrimental to the company’s competitiveness, reputation and good financial management amid the slowdown in the Chinese property sector.

¨      SGD Credit Market: ASL Marine announces profit guidance. There was a flattening in the short-to-mid curve, with the 2y rising by 2bps to 1.45% while the 5y rose 0.9bps to 1.69%. Property names such as CAPLSP, CHEUNG and PREHSP traded tighter by between 4-7bps (according to Bloomberg). ASL Marine (NR) announced that it is expecting a net loss in its 4QFY6/16 results partially due to full impairment of its Swiber receivables. Looking ahead, investors will be eyeing the Singapore July Industrial Production numbers (consensus: 0.8%; June: -0.3%).

¨      MYR Credit Market: Belly of the MGS curve moved -4bps to -3bps, with the 5y and 7y closing at 3.15% and 3.42% respectively. The reopening of MYR3.0bn 10y MGS 11/26 (closed later at 11.30am) was quoted at a tight WI of 3.54/53%. Active flows in corporate space, which remained slanted towards the recently issued Lebuhraya Duke Fasa 3 and PTPTN papers on combined transactions of MYR402m. RHB (A3/BBB+/NR) reported a 14.3% YoY fall in 1H16 net profit to MYR920m due to a one-off impairment on a Singapore corporate bond of MYR253.5m. On the macro front, the inflation rate eased for the fifth straight month in July to 1.1% YoY from 1.6% in June, driven by falls in the price of transport, communication and clothing and footwear, opening up further policy headroom for another rate cut if downside risk materialised.