Maybank Islamic Established MYR10bn ICP/IMTN Programme

24 February 2017

Credit Markets Update

                                               

Maybank Islamic Established MYR10bn ICP/IMTN Programme     

MYR Credit Market:

¨      30y Reopening MGS in focus. The detailed for the reopening of 30y MGS 3/46 auction was released yesterday at tender size of MYR2.0bn (additional MYR1bn will be privately placed), with the WI was quoting at 4.72/4.68%, within the cash market closing of 4.72%. Benchmark yields settling near to previous level yesterday, although the 5y MGS declined 3bps lower to 3.68%. The MYR strengthened for the 3^rd consecutive session to 4.450/USD after the FOMC minutes was less hawkish-than-expected. Meanwhile, Malaysia’s foreign reserves remained at USD95bn, which equivalent to 8.4 months of retained imports and 1.1 times of short-term external debt.

¨      Trading activities were 57% lower at MYR347m. Of the top traded, PTPTN 3/24 was unchanged at 4.19%, Gamuda 3/20 fell 10bps 4.40%, Ambank ‘23c18 declined 4bps to 4.70% while GIC 2/23 realigned 34bps higher to 5.14%.

¨      Flattish FY16 result for Maybank. The largest domestic banking group recorded a net profit of MYR6.96bn in FY16, a drop of 0.3% from previous year. Better results across the operating segments led to 5% improvement in total operating income, although bottom line was hit by a 68% spike in impairment on loans. Gross impaired loan ratio increased to 2.28% in FY16 (FY15: 1.86%) mainly due to its Malaysian and Indonesian lending portfolio. Capitalization level improved with CET1 of 14.0%, Tier-1 of 15.7% and Total Capital Ratio of 19.2%.

¨      Meanwhile, Maybank Islamic established new MYR10bn ICP/IMTN Programme. RAM has assigned AAA/sta rating to Maybank Islamic’s proposed MYR10bn ICP/ITMN Programme.

APAC USD Credit Market:

¨      UST bull steepened; Treasury Secretary Mnuchin’s suggestion that he would consider longer-term bond issue sent the treasuries lower. On the economic front, initial jobless claims remained low for the week ending February 18 (actual: 244k, consensus: 240k). 2y note slipped to 1.18% (-3.4bps), while the 10y bond yield tightened by 2.0bps to 3.01%.

¨      Over in Asia, the iTraxx AxJ IG index fell by 1.1bps to 95.9bps, with Malaysia and China as the best performing countries. Credit markets was relatively stable, with IG spreads climbing to 172.2bps (+0.8bps) yesterday. The average HY bond yield was a fraction wider at 6.52% (+0.2bps).