Digi Plans to Issue MYR900m Sukuk by Mid-Apr

4 April 2017

Credit Markets Update

                                               

Digi Plans to Issue MYR900m Sukuk by Mid-Apr 

MYR Credit Market:

¨      Govvies moved sideways on cautious tone. Activities on the benchmark govvies stayed quiet as investors turned attention to the meeting between US President Donald Trump and China President Xi Jinping this Thursday and Friday. Volume totaled MYR2.8bn with 59% of investors’ interest were in the <3y tenure bracket. The GII 4/20 and MGS 11/19 were the top traded, both closing near to previous level at 3.76% and 3.69% respectively. Benchmark govvies also moved sideways with the 3y MGS settling 1bp higher at 3.54% while 10y MGS increase at the similar quantum to 4.14%. The MYR closed 0.05% weaker at 4.4278/USD yesterday.

¨      Modest trading activities in the corporate market. A total of MYR416m changed hands yesterday. Utilities names were the top traded – YTL Corp on MYR60m trades was unchanged at 4.59%, while Telekom 4/23 realigned 37bps lower to 4.33% from its previous trade in Jan-16. Elsewhere, newly issued Mah Sing Pc20 seen traded at 6.69%, 11bps below its coupon.

¨      Over the primary market, Digi (AAA) approached the market with a proposed issuance of MYR900m from its MYR5bn ICP/IMTN Programme, separating over 3 tranches – 5y (IPT: 4.30%-4.45%), 7y (IPT: 4.45-4.60%), and 10y (IPT: 4.65-4.80%), with early redemption option.

APAC USD Credit Market:

¨      Investors sought safe-haven assets driven by the weaker-than-expected US manufacturing PMI print at 53.3 (consensus: 53.5), slower ISM manufacturing index of 57.2 (prior: 57.7), underperformance in global equities and the St Petersburg subway blast. 10y UST slipped 7.5bps to 2.32%, while the 2y narrowed approximately 3bps to c.1.23%.

¨      In Asia, the iTraxx was a tad tighter at 94.2bps (-0.5bps), with lower CDS spreads seen in IDBI Bank Ltd, Korea Exim Bank and Hutchison Whampoa Ltd. The IG credit spreads were up by 1.7bps to 172.5bps, while the HY space remained unchanged at 6.44%.

¨      In the primary market, Indika Energy (issuer rating: Caa1/NR/CCC) tested  the market with a Triple C rating USD offering yesterday, sold USD265m 5NC3 bond at 6.95% against its IPT at 7.5% area. State Bank of India (Baa3/BBB-/BBB-) priced another USD100m tap of 3y floating bond (existing securities: USD500m) at 3mL + 95bp area.

¨      Over to rating space, Fitch revises China Oriental Group Company Limited’s (COG) outlook from stable to positive to reflect that the company’s FFO-adjusted net leverage is expected to remain low at approximately 1.5x after net debt reduction in 2016 and improved EBITDA generation ability due to higher cost efficiency and better product mix.

¨      Elsewhere, Fitch also assigned first-time BBB- rating to Oil India International Pte Ltd (OIIPL). This rating is to reflect strong linkage with the parent, Oil India Limited and its guarantee on OIIPL’s proposed senior unsecured notes.  

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