Asian Bonds Extend Gains in July; Swiber Led Rout in O&G Sector; Falling Yields Encouraged Primary Issuances

4 August 2016

Credit Market Monthly Review

July 2016

Asian Bonds Extend Gains in July; Swiber Led Rout in O&G Sector; Falling Yields Encouraged Primary Issuances     

Market Review

¨   USD: Long-term Treasuries yields remained at all-time low. Upbeat Asian credit markets.

¨   SGD: Swiber drives sell-off in O&G space; O&G companies pursue corporate action to stay afloat. REITs generally saw weaker performance.

¨   MYR: Another month of strong performance for MYR bonds spurred by earlier-than-expected OPR cut. Corporate and quasi-government bond/sukuk spiked 0.95-0.96% over the same period.

Demand and Supply Trends

¨   USD: Strong primary market supply. APAC new bond issuances surged 104% higher MoM to USD28.6bn (Jumped 60% YoY) in July against USD14.0bn observed in June.

¨   SGD: July monthly issuances lowest YTD.

¨   MYR: Robust MYR14.9b issuance in July, YTD issuance boosted to MYR54.2bn.

Rating Trends

¨   More downgrades in July, mostly related to Fitch’s methodology change; average upgrade/downgrade ratio of 0.25x in July against 0.30x in June.

¨   Indian banking sector was placed on negative outlook from stable by Fitch.

¨   Moody’s anticipates mix set of 2Q16 results from Asian oil & gas players.

¨   Fitch downgraded Malaysia’s LCLT IDR to A-/Sta, from A/Sta.

Outlook

¨   EMs’ bonds remain attractive amid global easing.