New Sukuk from BEWG; Trump Hinted USD1trn Infrastructure Plan

5 April 2017

Credit Markets Update

                                               

New Sukuk from BEWG; Trump Hinted USD1trn Infrastructure Plan

MYR Credit Market:

¨      MARC assigned a preliminary AA/Sta rating to BEWG (M) Sdn Bhd’s MYR400m Sukuk Wakalah. BEWG, a subsidiary of state-owned Beijing Enterprises Holding Limited, is undertaking a MYR499m water treatment project in Kemaman, Terengganu expected to be completed in Nov-18. The proceeds from the Sukuk will be utilized for the refurbishment and upgrading of the water treatment and distribution facilities.

¨      Quiet corporate market. Merely MYR223m traded yesterday. Little change in top traded bonds – YTL Power ’23 was unchanged at 4.57%, Khazanah ’20 ended flat at 4.02%, while Malakoff ’19 fell 1bp to 4.45%.

¨      New 20y MGS 4/37 for auction. BNM announced the new 20y benchmark with tender size of MYR2bn (in addition to MYR1bn private placement). Decent flow of MYR2.5bn seen in the govvies market yesterday. Benchmark MGS yields ended flat to -3bps with the 3y falling 2bps to 3.52% while the 10y slipped 3bps to 4.12%. The MYR weakened mildly to 4.431/USD before the trade data today.

APAC USD Credit Market:

¨      UST bear steepened. 2y note widened by 2.6bps to 1.25% while the 10y note climbed to 2.36% (+4.1bps) following President Trump’s speech on his infrastructure plan yesterday, spurring investors’ confidence. Transportation Secretary Elaine Chao hinted that the USD1 trillion plan will “be announced later this year.” On the economic front, the Durable Goods Orders data beat estimate (actual: 1.8%, consensus: 1.7%). The U.S. Dollar Index remained unchanged at 100.54.

¨      Over in Asia, the iTraxx AxJ IG index stayed firm at 94.5bps (+0.3bps), leading by PETMK, Kookmin Bank and IDBI Bank Ltd. The IG space picked up 3.0bps to 175.5bps, while the HY bond yield slid to 6.43% (-2.0bps).

¨      In the pipeline, Saka Energi Indonesia PT (NR) mandated three banks (i.e. Citi, UBS, BNP) for up to USD500m bond issuance.

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