Tuesday, April 18, 2017

Benchmark USTs’ rose a tad; 10y UST yields gained 1.2bps to c.2.25%, while the 2y inched 0.4bps lower to 1.20% following comments from US Treasury Secretary Steven Mnuchin on “a stronger USD will be a good thing over time”, while the DXY continued to slip to 100.29 (-0.22%).

18 April 2017


Credit Markets Update
                                               
RHB Islamic Priced MYR250m 10nc5 Subordinated Notes at 4.88%
MYR Credit Market:
¨      Financial names led corporate flows. Trading activities were decent at MYR471m yesterday. Maybank T2 ’24c19, which accounted for almost half of the transaction, fell 12bps to 4.61%. Yields for other banking bonds generally moved lower – BPMB ’32 fell 1bp to 4.92%, CIMB Thai T2 ‘26c21 slipped by the similar quantum to 5.22% while RHB Bank 11/22c17 closed at 4.10% (-7bps). Over the quasi-government front, Cagamas ’19 crossed flat at 3.92%, while PTPTN ’32 rose 4bps to 4.90%. Elsewhere, newly issued Digi ’22 on its debut trade exchanged hand at 4.34%, 4bps below the issuance coupon.
¨      Over the primary market, RHB Islamic priced MYR250m 10nc5 AA3-rated subordinated notes at 4.88% (MGS+110bps).
¨      Investors focused in short-to-belly of the curve. Volume totalled MYR2.5bn where more than 80% of the trading activities were concentrated in maturity <5 years. The 5y MGS and GII were among the top traded, both declined 2bps to 3.78% and 3.85% respectively, while the MYR settled flat at 4.405/USD yesterday.
APAC USD Credit Market:
¨      Benchmark USTs’ rose a tad; 10y UST yields gained 1.2bps to c.2.25%, while the 2y inched 0.4bps lower to 1.20% following comments from US Treasury Secretary Steven Mnuchin on “a stronger USD will be a good thing over time”, while the DXY continued to slip to 100.29 (-0.22%).
¨      Quiet Asian credits given holiday break and the wait-and-see approach by investors. IG credit spreads and average HY bonds closed flat at 184.3bps and 6.38%. Asian IG CDS inched slightly higher by 0.1bp to c.101.5bps. UOB (+3bps) was the biggest underperformer among the constituents, whereas CDS of Samsung Electronics traded 3.1bps tighter.
¨      The primary market and the rating space were similarly in a lull, without any new bond issuance or rating changes. In the pipeline, Solusi Tunas Pratama (issuer rating: NR/BB-/BB-), an Indonesian telco network provider, plans to sell USD400m 7y bond at a maximum coupon rate of 8%.


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