Remain With Concessionaires and Banks; Value in UniTapah and LDF3

25 August 2016

AA Relative Value Ideas (MYR)

Remain With Concessionaires and Banks; Value in UniTapah and LDF3

Highlights

¨         Secondary flows in AA-rated securities declined 33% MoM to MYR3.5bn in Jul-16 (MYR5.3bn in Jun-16) with investors generally switching to higher grade given the large issuances in the AAA (MYR5.4bn) and GG (MYR6.1bn) space.

¨         AA primary market issuances in Jul-Aug climbed to MYR6.25bn following the MYR3.6bn bond deal by Lebuhraya Duke Fasa 3 (LDF3).

¨         AA indicative curves tightened with the AA3 curve compressed the most by 7-17bps across the 1-15y tenure.

¨         We see opportunities in Maybank lT1 9/68 c18, Maybank B3T2 1/24 c19, Unitapah 33-34’ and the new LDF3 26-39’ which provide attractive pick up from a relative valuation perspective.