22 December 2016
Credit Markets Update
Way
Open for Proposed MBSB Merger; Mudajaya Secured Financing
¨
APAC USD Credit Market: Oil
weighed on Treasuries. Dampened inflation outlook, Brent price weakness
(-1.6% to c.USD54/bbl) coupled with the underperformance in US equities led to
lower benchmark UST yields. UST 2y and 10y shed 2-3bps to 1.19% and 2.53%
respectively. Moving to Asia, both IG credit spreads and
average speculative bond yields were unchanged at 182.1bps and 6.85%.
Elsewhere, the iTraxx AxJ IG declined 7.8bps to 115.6bps driven by lower CDS
spreads observed in banking credits such as IDBI Bank, ICICI Bank and Bank of
China.
¨
SGD Credit Market: Bondholders
reject Rickmers consent solicitation. There was a mild decline in the
short-to-mid SOR curve by 1-1.3bps, with the 2y and 5y closing at 1.76% and
2.43% respectively. Rickmers Management Trust, which is seeking to
reverse the technical default on its sole outstanding SGD100 RMTSP 5/17, failed
to receive approval from its bondholders for its proposal to extend its bond
maturity. Meanwhile, Sembcorp Industries (NR) announced that it had
secured financing for its Bangladeshi power plant project from sources
including International Finance Corporation while Keppel Corp (NR) announced
that it has won the bid to develop Singapore’s fourth desalination plant.
¨
MYR Credit Market: New
facility from Lafarge Cement; Mudajaya’s new financing alleviates liquidity
concern. RAM has assigned AA2/Sta rating to Lafarge Cement Sdn Bhd’s
proposed MYR500m Sukuk Wakalah Programme. Receiving a similar rating to that of
its holding company, Lafarge Malaysia, as Lafarge Cement is the main operating
subsidiary which accounts for over 70% of the Group’s total revenue over the
past few years. The proceeds from the first issuance from the proposed Sukuk,
estimated at MYR280m, is earmarked for refinance existing Lafarge Malaysia’s
ICP maturing on 16-Jan next year, hence the Group’s gearing should remain
stable at 0.14x, similar to current levels. Meanwhile, BNM has no opposition
for the M&A proposition of MBSB and Asian Finance Bank, a 66.7% owned
bank by Qatar Islamic Bank. The merged entity, if the M&A succeeds, would
fetch a total asset value of MYR47bn based on the latest quarter result as at
30-Sep, about 85% of the total asset size of Alliance Financial Group.
Elsewhere, Mudajaya (A2/Neg) has secured a USD50m term loan facility
from UOB Malaysia along with the USD60m bond issuance, which alleviates the
concern of its upcoming MYR240m bond repayment maturing on 23-Jan-17. Moreover,
govvies rallied further yesterday with the 3y and 5y MGS declining to 3.52%
(-10bps) and 3.68% (-7bps) respectively, while the MYR lingering slightly below
the 4.48/USD level. Corporate volume totaled at MYR383m where CMBS 5/17,
Kimanis 12/18 and LPPSA 9/23 were the top traded.
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