FW: RHB FIC Credit Markets Weekly - 23/10/17

 

 

 

23 October 2017

 

 

Credit Markets Weekly

 

Expectations Pressure UST Upwards; USD APAC Primaries Picked Up

 

SUMMARY:

¨      MYR Credit Market: MGS marginally higher; EM Asian currencies fall. Benchmark govvies yields ended marginally higher across the curve amid thin trading activity especially on benchmarks amid the shortened trading week. The 3y MGS gained +1bp WoW to 3.41%, while the 10y added +2bps to 3.91%. Brent oil prices edge higher +0.6% WoW to USD57.8/bbl or its 3-week high largely driven by on-going tensions in the Middle East and on declines in US crude supply. EM Asian currencies ended weaker against the USD, the MYR was no exception, weakening marginally +0.07% WoW to 4.225/USD.

¨      Corporate News – MARC assigns preliminary rating of AA_IS to Fortune Premiere's MYR3bn sukuk murabahah programme. Press Metal Labuan Ltd (guaranteed by Press Metal Aluminium Holdings Bhd along with some key subsidiaries) has been assigned with a rating of Ba3/Sta and BB-/Pos respectively by both Moody's and S&P.

¨       APAC USD Credit Market: Sell-off in UST; DXY soared led by US political and Fedspeaks. Treasuries yields surged at beginning of last week after comments from Fed Chair Yellen that ongoing economic strength warrants gradual rate hikes as soft inflation readings are unlikely to persist. UST yields continue to be pressured upwards as the Senate passed its budget plan which paved the way towards tax reform, along with news surrounding the nomination for Fed chairperson. Current news suggests that there are three candidates currently being considered, which is John Taylor, Governor Jerome Powell and current Fed Chair Janet Yellen. Asian IG and HY markets maintain performance; the iTraxx AxJ IG compressed to 75.1bps; Primaries surged; USD7.5bn new bond supply recorded, doubling from last week's USD3.5bn.

¨      Rating Actions – Moody's changed the outlook for LVGEM (China) Real Estate Investment Co Ltd B2 rating to negative from stable; Moody's confirms the rating of Lodha Developers Private Limited at B2/Sta; Moody's affirmed Dah Sing Bank's rating at A3, revising its outlook from negative to stable.

 

Table 1: Index Weekly Movements

Indices	20-Oct	13-Oct	Weekly Chg (bps)
iTraxx AxJ 5y IG	75.1	77.5	-2
AxJ IG Spread (bps)	158.9	160.6	-2
AxJ HY (%)	6.58	6.59	-1
SOR 2y (%)	1.44	1.37	7
SOR 5y (%)	1.88	1.80	8
Malaysia 5y CDS	63.0	65.4	-2
MGS 3y (%)	3.41	3.40	1
MGS 5y (%)	3.61	3.59	1
MGS 7y (%)	3.90	3.88	2
MGS 10y (%)	3.91	3.89	2
AAA 5y Spread* (bps)	71	73	-2
AAA 10y Spread* (bps)	73	73	0
AA 5y Spread* (bps)	105	107	-3
AA 10y Spread* (bps)	114	113	1

Source: Bloomberg, BNM, RHBFIC        *MYR-denominated bonds

 

 

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