FW: RHB FIC Credit Markets Weekly - 9/10/17

 

 

9 October 2017

 

 

Credit Markets Weekly

 

US NFPs Fall; MYR Bonds Foreign Ownership Rebound

 

SUMMARY:

¨      MYR Credit Market: EM Asian currencies fell sharply against the USD as the MYR weakened for the 3^rd straight week to 4.237/USD (-0.39% WoW) despite the 2^nd upward Malaysian GDP revision by the World Bank and the improvement in foreign reserves. The MGS curve was little changed except for the 7y which jumped over 5bps to 3.89%. Benchmark 3y and 10y MGS was relatively unchanged on a weekly basis at 3.38% and 3.90%. Secondary market activity quiet; MYR primary market slowed 18% WoW.

¨      Corporate News – MARC assigned a rating of AA-/Sta to QSPS' MYR1bn Green SRI sukuk programme. QSPS is wholly-owned by Quantum Solar Park Malaysia, which is in-turn equally owned between ItraMAS Technology Sdn Bhd, MalTechPro Sdn Bhd and CamLite Sdn Bhd.

¨       APAC USD Credit Market: NFPs fell with unemployment gains, UST yields and USD still ended higher WoW. Market continue to price in expectations of the tax reform in the US, while speculation continues on a possible replacement for the current Fed Chair by President Trump. Geopolitics continued to be priced in with concerns over calls for independence called by the region in Catalonia, Spain and as North Korea and the US continue to trade threats of attacks once more, while the US PMI and ISM production data continue to surprise on the upside. The week still saw the USD strengthen and the UST weaker WoW. The DXY Index continued to rally to 93.80 (+0.78% WoW). The UST 2y ended at 1.51% (+2.1bps) and USTs 10y gained +2.5bps WoW to end at 2.36%. Asian credit sees outperformance of IG; primaries died down on the "Golden Week" in Asia; USD610m deals printed far below the issuance of USD6.91bn last week.

¨      Rating Actions – S&P revised upwards Origin Energy Financial Ltd (Origin)'s outlook to BBB-/Pos from BBB-/Sta; Fitch downgraded PT Alam Sutera Realty Tbk and its fully owned subsidiary Alam Synergy Pte Ltd to B/Neg from B+/Stable.

 

 

 

Table 1: Index Weekly Movements

Indices	06-Oct	29-Sep	Weekly Chg (bps)
iTraxx AxJ 5y IG	77.6	81.6	-4
AxJ IG Spread (bps)	163	166.4	-3
AxJ HY (%)	6.65	6.64	1
SOR 2y (%)	1.38	1.39	-2
SOR 5y (%)	1.85	1.86	-1
Malaysia 5y CDS	65.0	69.4	-4
MGS 3y (%)	3.38	3.39	-1
MGS 5y (%)	3.59	3.57	1
MGS 7y (%)	3.89	3.84	6
MGS 10y (%)	3.90	3.92	-2
AAA 5y Spread* (bps)	73	71	2
AAA 10y Spread* (bps)	73	84	-11
AA 5y Spread* (bps)	108	103	4
AA 10y Spread* (bps)	115	121	-5

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

 

 

This message is intended only for the use of the person(s) to whom it is addressed and may contain information that is privileged or otherwise protected from disclosure. If you are not the intended recipient you are hereby notified that any use, review, disclosure or copying of this message and the information it contains is prohibited. If you receive the message in error, please notify the sender by reply e-mail and discard all its contents.   Thank You.