Market Quiet on Event-Laden Week; Rantau Issued 15y at 5%

17 January 2017

Credit Markets Update

Market Quiet on Event-Laden Week; Rantau Issued 15y at 5%   

MYR Credit Market:

¨      Market quiet before key data and events during the week. Merely MYR863m transacted in both corporate and govvies market yesterday as investors stayed on the side lines before the CPI (18-Jan), BNM’s and ECB’s MPC Meetings (19-Jan) and Trump inauguration as US new president on the 20-Jan.

¨      MGS curve inched upward with the 5y inching 4bps higher to 3.76%, while 10y rose 1bp to 4.27%. The 3y GII was the top traded on MYR200m transactions, settling flat at 3.64%. The MYR maintained around the 4.46/USD level.

¨      Muted corporate market. Volume totalled MYR341m. Telekom ’24s realigned to 4.47-4.48% (-12bps to +34bps from last traded) on MYR90m trades. Other top traded include Prasarana 8/23 (-7bps to 4.21%), Sarawak Hidro (+14bps to 4.82%), UEMS 12/18 (-3bps to 4.64%) and Ambank 10/22c17 (-1bp to 4.17%).

¨      Rantau (AAA) issued MYR1bn 15y IMTN at 5.0%. The Khazanah’s funding vehicle currently has 6 tranches outstanding fully drawn down under its MYR7bn IMTN programme.

APAC USD Credit Market:

¨      The US markets were closed yesterday for Martin Luther King Jr. Day.

¨      In Asia, the IG credit spreads tightened by 0.5bps, from 181.2bps to 180.7bps. The HY credit spreads widened by 1bp on the back of treasuries and lower-than-expected December retail sales.

¨      On the other hand, the iTraxx AxJ IG was quoted 0.1bps tighter. The index tightened mildly, with lower CDS spreads seen in Samsung Electronics, Sun Hung Kai Properties and Bank of India. The CDS for Samsung Electronics was relatively unaffected on the news that prosecutors were seeking to arrest the company’s chief, Lee Jay Yong.

¨      In the primary space, Times Property Holdings Ltd (issue rating: B2/NR/B+e) priced USD375m 3Y bonds at 6.250%, compared to IPT at 6.625% area. Yanlord Land HK Co Ltd (issue rating: Ba3e/NR/NR) sold USD450m 5nc3 bond at 5.875%, IPT was 6.25% area.

¨      Moving to rating action, S&P affirmed LT rating of China South City Holdings Ltd at B/Neg, resolving the CreditWatch status. This reflects that S&P believes that the company will not face liquidity pressure after the sales of Co-Chairman’s shares. The rating agency also initiated AA-/Neg rating to HSBC Bank China Co Ltd. The negative outlook on HSBC China reflects the negative outlook on the sovereign credit ratings on China, ss HSBC China is sensitive to mainland China’s rising credit losses.

SGD Credit Market:

¨      Ausgroup remedies default situation. Ausgroup (NR), which technically defaulted on the consent solicitation to extend the maturity of its SGD110m AUSGSP 10/16 in Dec-2016 when it could not obtain the necessary Ministerial consent, has now announced that it received the necessary approvals and has remedied the default.

¨      Vallianz (NR) is conducting an equity fundraising to raise SGD7m. Meanwhile, Singapore’s Dec NODX came in better than expected at 9.4% (consensus: 5.8%).

¨      There was a widening in the short-to-mid SOR curve, with the 2y rising by 2.5bps to 1.62% while the 5y rose 3bps to 2.20%.