29 January 2018
Credit Markets Weekly
BNM Raised OPR 25bps; ECB and BoJ Maintained Benchmark Rates.
SUMMARY:
¨ MYR Credit Market: BNM raised OPR by 25bps bringing the current level to 3.25%, as part of normalisation plan. Following a more hawkish statement made in its Nov meeting, the BNM MPC raised its policy rates a further 25 bps to 3.25%; The week also saw the weakening of the USD, as the DXY index continued to push below 90 to the benefit of EM Asia; With the result of the BNM announced and the 15y MGS which closed over the week, govvie trade volumes rose up to MYR12.9bn, ahead of the MYR11.87bn 3-month weekly average. Following the OPR adjustment last week, OPR is likely to stay pat at 3.25% in 2018.
¨ Corporate News – RAM Ratings downgraded the rating of Projek Smart Holdings Sdn Bhd to A1/Neg; MARC Ratings affirmed the AAA/Sta rating on both Berjaya Land Berhad’s (BLand); RAM Rating reaffirmed the C2/Sta rating of Lebuhraya Kajang-Seremban Sdn Bhd’s (LEKAS) Junior Sukuk; RAM Ratings has reaffirmed the AA1/Sta ratings of YTL Corporation Berhad (YTL Corp); RAM Ratings has reaffirmed the AA1/Sta ratings of YTL Power International Berhad (YTL Power); RAM Rating reaffirmed the AA3/Sta rating of Perbadanan Kemajuan Negeri Selangor (PKNS); MARC has affirmed its AA-IS/Sta rating on MMC Corporation Berhad (MMC); MARC also affirmed its AAA-IS/Sta rating on PETRONAS Dagangan Berhad (PDB); RAM Ratings has reaffirmed the AA3/Sta rating of Jimah Energy Ventures Sdn Bhd (JEV); RAM Ratings has reaffirmed the A1/Sta rating of Special Power Vehicle Berhad (SPV).
¨ APAC USD Credit Market: US Treasuries bear flattened ahead of FOMC meeting. Focus of the market was mostly on the first major central bank meetings in 2018, led by Bank of Japan and European Central Bank. Though muted action was broadly anticipated, both showed little signs of tightening due to struggling inflation growth. USTs fell to new lows led by shorter end of the curve.
¨ Rating Actions - Fitch has upgraded Fufeng Group Ltd. (Fufeng) to BBB-/Sta from BB+/Sta; Fitch has also upgraded Yingde Gases Group Co. Ltd. (Yingde) to B/Sta from CCC+/Pos; Moody’s has upgraded Emeco Holdings Ltd. rating from Caa1/Pos to B3/Sta; Fitch upgrades the rating of Development Bank of the Philippines to (DBP) to BBB/Sta and the rating of Land Bank of the Philippines (LBP) to BBB-/Sta; Moody’s downgraded Wharf (Holdings) Limited to BBB/Sta from A- /Neg*; Fitch assigned BB-/Sta rating on Central China Real Estate Limited (CCRE); Fitch published a B/Sta rating on Gangtai Group Co. Ltd; Fitch assigned a B-/Sta rating on Rhodium Resources Pte Ltd.; Moody’s assigned a B1/Sta rating to Golden Energy and Resources Ltd. (GEAR); Moody’s has assigned a B2/Pos rating on Landsea Green Properties Co. Ltd. (Landsea).
Table 1: Index Weekly Movements
Indices | 26-Jan | 19-Jan | Weekly Chg (bps) |
iTraxx AxJ 5y IG | 63.4 | 63.1 | 0.3 |
SOR 2y (%) | 1.47 | 1.52 | -5 |
SOR 5y (%) | 1.89 | 1.91 | -2 |
Malaysia 5y CDS | 55.4 | 55.4 | 0 |
MGS 3y (%) | 3.35 | 3.35 | 0 |
MGS 5y (%) | 3.59 | 3.54 | 5 |
MGS 7y (%) | 3.91 | 3.92 | -2 |
MGS 10y (%) | 3.89 | 3.93 | -4 |
AAA 5y Spread* (bps) | 73 | 77 | -4 |
AAA 10y Spread* (bps) | 77 | 75 | 2 |
AA 5y Spread* (bps) | 103 | 107 | -4 |
AA 10y Spread* (bps) | 111 | 109 | 2 |
Source: Bloomberg, BNM, RHBFIC *MYR-denominated bonds
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