21 April 2017
Credit Markets Update
New Proposed MYR20bn MTN Programme from CIMB
MYR Credit Market:
¨ GG bonds fuelled corporate activities. A total of MYR290m corporate bonds changed hands yesterday. GG bonds, which accounted for almost 40% of the trades, ended mixed – PTPTN ’21 (-5bps to 4.07%), GovCo ’21 (+7bps to 4.05%), while Johor Corp ’22 added 3bps to 4.15%. Elsewhere, AAA-rated GB Services ’19 was unchanged at 4.52% on MYR70m trades, and JEP ’21-31 closed flat to -2bps at 4.52-4.99%.
¨ Investors scattered around the 5y govvies. Trading volume breached MYR2bn yesterday. Benchmark 5y MGS was the top traded, closing flat at 3.77% on MYR407m trades yesterday. Trading activities were muted on other benchmarks; the 3y MGS fell 2bps to 3.33% while 10y MGS rose 1bp to 4.12%. The MYR continued its positive momentum breaching the 4.40 level, the first time since Nov last year.
¨ On rating news, RAM assigned AAA rating to CIMB Bank’s proposed MYR20bn MTN programme.
APAC USD Credit Market:
¨ The U.S. Treasuries traded lower yesterday ahead of the French election on Sunday (Apr 23). The centrist Macron led the polls, with 24% of the votes, followed by Le Pen (22.5%). The Treasury Secretary Mnuchin also hinted that “major tax reform” will be announced soon from the Trump administration. The DXY index edged higher to 99.78 (+0.04%).
¨ In Asia, the iTraxx AxJ IG index traded lower to close at 100.3bps (-1.4bps). The best performers were Hyundai Motor Co, CNOOC Ltd and PCCW-HKT Telephone Ltd. The IG space tightened by 1.9bps to 183.1bps, while the HY credit spreads stayed firm at 6.39%.
¨ The primary market remained busy, with total issuance of USD3.85bn. China Huarong Finance 2017 Co. Ltd (issue rating: Baa1/NR/A) raised USD2.97bn across 5 tranches (refer to Table 2). Want Want China (issue rating: A3/NR/NR) priced USD500m 5y bond at T+135bp, its IPT was at T+160bp area.
¨ Over in the rating space, Fitch revised Binhai Investment’s outlook from stable to negative to reflect its elevated capex and weakened credit profile. Fitch expects the company’s FFO-to-net adjusted debt ratio to remain above 4x in 2017 and 2018 (3.8x in 2016).
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