15 September 2016
Credit Markets Update
Another O&G bond seeks restructuring; SBI Priced First Indian Banks’ USD AT1 at 5.5%
¨ APAC USD Credit Market: Asian Credits Widened. IG spreads and speculative bond yields rose 1-7bps to 187bps and 6.41% respectively, though Asian IG CDS spreads were marginally tighter at 112.4bps. Elsewhere, Treasuries strengthened across the curve as the recent sell-off was overdone with investors eased back. UST 2y fell 4bps to 0.76%, while the 10y narrowed 3bps to 1.70%. In the primary front, Foxconn Far East Limited (NR/A-/NR), guaranteed by Hon Hai Precision Industry (NR/A-/NR), which is the world’s largest electronics manufacturer service provider, priced USD600m 5y bonds at T+110bps against IPT at 130bps and USD400m 10y bonds at T+140bps (IPT: +165bps area). State Bank of India (SBI)(issue rating: B1/B+/NR) sold the first USD AT1 by an Indian bank with the issuance of USD300m Pnc5 at 5.5% compared to IPT at mid-5%.
¨ SGD Credit Market: Another O&G bond seeks restructuring. The short-to-mid curve steepened yesterday, with the 5y rising by 3.5bps to 1.76% while the 2y rose 1bp to 1.45%. Flows appeared tilted towards bank papers such as ABNANV and SOCGEN as well as SINTEC. Meanwhile, Rickmers Maritime Trust (NR) proposed to bondholders of its sole outstanding SGD100m RMTSP 5/17 a swap for a SGD28m fixed rate step-up perpetual convertible bond. Looking ahead, Singapore’s July Retail Sales will be released this afternoon (consensus: 1.4%; June: 0.90%).
¨ MYR Credit Market: Modest demand for 5y MGS Reopening Auction. The MYR3bn auction concluded at BTC of 1.67x, averaging at 3.256%, which is 36bps lower than the similar auction in May. Other benchmark ended the day firmer with yields for 3y, 7y and 10y MGS declining 2-4bps on thin liquidity. MYR weakened 0.4% to 4.12/USD as Brent price declined 2.7% to USD45.25/bbl amid reports on Nigeria and Libya restarting their oil fields which would worsen the global oil oversupply situation. Corporate market reached MYR628m volume with top traded bonds moving sideways - Danga ’26-’30 (-0.4bps to +1.3bps), DanaInfra ’23 (+0.5bps) and PLUS ’29-’32 (flat to -0.2bps).