Thursday, March 9, 2017

CIMB Issued USD1bn Bonds, MGS+GII another MYR7.6bn outflow

9 March 2017

Credit Markets Update
CIMB Issued USD1bn Bonds, MGS+GII another MYR7.6bn outflow 
MYR Credit Market:
¨      Offshore players continued the outflows. Foreign holdings in the MGS+GII reduced by another MYR7.6bn to MYR179.4bn in Feb-17 amid the heavy MGS maturity of MYR8.75bn during the month, translating to a retreat totalling MYR35.5bn by the foreign players since Trump’s victory in Nov last year. As a proportion of the total MGS+GII outstanding of MYR601.7bn in Feb, holdings by the offshore participants fell to 29.8% as at end-Feb, from 31% the previous month. We see potential for this trend to continue into March as we see another MYR10.5bn of MGS maturing on 15-Mar before the FOMC meeting next week.
¨      The govvies remained on the bearish side with the 3y MGS rising 10bps to 3.45% yesterday. Investors to focus on the MYR4bn 5y New MGS auction today with WIs actively traded tight from between 3.85% and 3.87%. The MYR weakened another 0.16% to 4.455/USD yesterday.
¨      Corporate market quiet. Merely MYR216m changed hands yesterday, Notably, TNB WE ’30 realigned 18bps higher to 4.88% on MYR50m trades. Elsewhere, Telekom ’24s ended 2-11bps firmer to close at 4.34-4.39%.
APAC USD Credit Market:
¨      UST bear steepened. 2y yield was 2.7bps higher at 1.35%, while 10y note climbed to 2.56% (+4.2bps). Strong ADP employment change data was released yesterday, the US economy added 298k jobs in February (consensus: 187k). The US Dollar Index added 0.26% to 102.07. Looking ahead, investors will be eyeing the NFP and unemployment rate set to be released tomorrow.
¨      The Asian credit markets were relatively quiet yesterday, as the iTraxx AxJ IG index widened marginally by 0.8bps, closing at 95.2bps. Higher CDS spreads seen in Reliance Industries Ltd, Hutchison Whampoa Ltd and GS Caltex Corp. The IG space slipped to 170.9bps (-1.2bps), with’s bonds outperforming after Moody’s put the company’s Baa3 rating on review for upgrade. On the other hand, the HY credit spreads picked up by 3.0bps to 6.55%.
¨      CIMB Bank Bhd (A3/NR/NR) issued 2-tranche bond yesterday to raise USD1bn. The company sold USD500m 3y floating bond at 3mL + 80, compared to its IPT at 3mL + 150bp area, and another USD500m 5y at T+115bp against its IPT at T+140bp area.
¨      In the pipeline, Kangde Xin Composite Material Group Co (Ba3/NR/BB) held an investor call yesterday for USD bond issuance. Guorui Properties (NR/B/B) is holding a roadshow today for USD bond issuance.

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