Thursday, August 4, 2016

Sluggish APAC Credit Markets; Swiber Receives Bridging Loan from DBS Prior to Liquidation

4 August 2016


Credit Markets Update

Sluggish APAC Credit Markets; Swiber Receives Bridging Loan from DBS Prior to Liquidation Filing
¨      APAC USD Credit Market: Another Sluggish Session for Asian Bond Markets. The iTraxx AxJ inched 1.2bp higher to 121bps, while IG credit spread and HY bond yields widened 2-3bps to 199.5bps and 6.38% respectively, generally tracking the underperformance in Asian equities. Over to the US, benchmark USTs strengthened 1-2bps, with the 10y (-1bp) settling at 1.54% following mixed US economic prints i.e. the better Jul ADP employment at 179k (consensus: 170k) and Markit July services at 51.4 (consensus: 51.4) though, July ISM contracted to 55.5 against expectations of 55.9. In the primary market, ICBC (A2/A/A) via its Singapore branch received 3.2x BTC for USD500m 3y bonds priced at T+117.5; IPT at +145bps. Road King Infrastructure (B1/BB-/NR) USD450m 3y bonds was 14.4x oversubscribed at 5% against IPT of 5.5% area. Meanwhile, Lippo Karawaci (Ba3/B+/BB-) received USD1.25bn orders for USD260m 7% 2022 bonds at 103.75 (IPT: 102.5 area).
¨      SGD Credit Market: Swiber receives bridging loan from DBS; SBREIT revised to Baa3/Neg. SOR 2y and 5y rose 0.5bps and 1.5bps to 1.47% and 1.76% respectively, SGD closed 0.2% weaker at 1.3422/USD, while Brent rises 3% to USD43.1/bbl. Swiber received a bridging loan from DBS Group shortly before the former’s liquidation filing. On the ratings front, Moody’s revised Soilbuild Business Space REIT (SBREIT)’s Baa3 rating to Negative from Stable due to ‘lack of clarity on its leasing strategy for 72 Loyang Way, partially debt-funded acquisition of Bukit Batok Connection and the pressure on occupancy rates.’ Property names were active in the secondary market led by CAPLSP after posting a 37% slide in bottomline on lower revaluation gains, in addition to AAREIT 8/18, LCHSP 3/19, and CENSUN 6/18c17.
¨      MYR Credit Market: Belly of the MGS treading water on mixed flow, with the 5y yield dipped 3bps to 3.21% while the 7y rose 5bps to 3.47%. The reopening of MYR3.0bn 7y MGS 8/23 (closed later at 11.30am) was quoted at a tight WI of 3.46/45%.  MYR credit flows more than doubled at MYR1.0bn from MYR0.4bn earlier on the back of Cagamas 12/18-10/28 (AAA), Danainfra 7/22-5/31 (GG), and KLK 8/25-4/26 (AA1). The KLK papers gained about 2bps to 4.439-4.479%, riding the palm oil price rebound to MYR2,423.50/MT (+1.5%). Focus will be on tomorrow’s trade balance reports for June, with expectation of a 3.7% and 0.4% drop in exports and imports respectively (from -0.9% and 3.1% in May).

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