30 March 2017
Credit Markets Update
Risk-off
Sentiment as UK Triggered Article 50
MYR Credit Market:
¨ MGS
yields spiked following global risk off. The auction for new 7.5y MGS 9/24
will close today with WI was seen quoted at 4.08/4.03%. Secondary trades
remained lacklustre with MYR1.4bn changing hands as investors on cautious tone
amid the formalization of Brexit process yesterday. The MGS curve bear
flattened with the 3y rising 10bps to 3.54% while the 10y rose 4bps to 4.13%.
The MYR strengthened 0.9% against GBP to 5.4949 as the United Kingdom formally
triggered the Article 50 to leave the European Union leading a global risk-off.
This sentiment, however, weakened the MYR against the greenback mildly to 4.42
level (+0.14%).
¨ Corporate
market stayed active. Volume totalled MYR685m yesterday. Over the banking
sector, Public ’18 was unchanged at 3.98% on MYR100m trades, while UOBM T2
‘25c20 increased 4bps to 4.51%. Power bonds generally ended flattish from SEB
’19-24 and TBEI ’26-32. Elsewhere, yields increased for GG bonds such as Johor
Corp ’22 (+11bps to 4.12%) and GovCo ’26 (+25bps to 4.40%).
APAC USD Credit
Market:
¨ UST traded higher today as the global
risk-off. The formal
lodgment of Article 50 leading to the Brexit added to the already weak global
sentiment. Over in US, the government funding for federal agencies expire at
midnight 28-Apr. Complicating this situation is the emergency request includes
$30 billion in extra funding for defense programs and $3 billion for border
security, including $1.5 billion for his proposed wall on the U.S.-Mexico. 2y
note rallied to 1.27% (-3.2bps), while 10y bond yield fell by 4.1bps to 2.38%.
The USD28 billion 7y Treasury auction garnered strong demand, with BTC of
2.56x, the high yield was at 2.215%. The DXY index advanced to 99.99 (+0.29%).
¨ iTraxx AxJ IG index tightened marginally by 0.6bps to 95.0bps, leading by Bank of
China, CNOOC Ltd and PETMK. The IG space was lower at 172.7bps (-1.6bps), while
the HY credit spreads rose to 6.49% (+1.5bps).
¨ The primary market resumes after a slow
week. WEA Finance LLC
(issue rating: A3/NR/BBB+, guarantor: Westfield Corporation Limited) priced
USD500m 5y bond at T+125bp area, against its IPT at T+137.5bp area. ICBC
Financial Leasing (issue rating: A2/NR/A) sold USD2bn bond in two parts –
i) USD1.15bn 3y bond at T+150bp area, ii) USD850 5y bond at T+152.5bp area.
Elsewhere, Hyundai Capital America (Baa1/NR/A-) raised USD1.1bn by
issuing three-tranche bonds (refer to Table 2).
¨ Over in ratings, Moody’s upgraded China
Aoyuan Property Group Limited’s LT rating from B2 to B1, with stable
outlook. This is to reflect that the company’s credit metrics are expected to
improve over the next 12 months. Its revenue/adjusted debt is likely to improve
to 70%-75% in 2017 (57% in 2016), while the EBIT/interest coverage will
increase to approximately 2.5x-3.0x in 2017 (2.2x in 2016). Fitch upgraded
Fufeng Group Limited’s LT rating from BB to BB+ to reflect improved
profitability and lower leverage. Fitch expects the company’s FFO to increase
from higher sales and earnings from improving efficiency in production.
This message is intended only for the use of the person(s) to whom it is
addressed and may contain information that is privileged or otherwise protected
from disclosure. If you are not the intended recipient you are hereby notified that
any use, review, disclosure or copying of this message and the information it
contains is prohibited. If you receive the message in error, please notify the
sender by reply e-mail and discard all its contents.
Thank You.
|
