12 February 2018
Credit Markets Weekly
Volatility Spiked On Risk-Off; New GII 08/25 Issued At 4.128%.
SUMMARY:
¨ MYR Credit Market: Despite strong shift in global yields, MGS remained anchored; MYR retraced; Malaysian bonds showed foreign inflows of +MYR4.5bn for the month of Jan 18; Govvie weekly trade volume saw a spike up to MYR14.5bn, above the 3-month average of 11.8bn; Corporate bonds/ sukuks secondary trades recovered to MYR1.41bn from MYR687m the week before.
¨ Corporate News - RAM affirmed the rating of UEM Group Berhad at AA2/Sta; MARC affirms Putrajaya Holdings Sdn Bhd (PJH) at AAAIS/Sta.
¨ APAC USD Credit Market: Despite the US risk asset sell-down and volatility, the US Treasuries ended the week mixed. The 2y and 5y USTs regained traction while 10y and 30y USTs sustained weakness from the previous week. Risk-off sentiment, possibly inflation-driven and policy-driven, seen earlier in the week had led to global equity rout, triggering flight to safety trade among investors. Amid this volatility, the US legislature hit its deadline once again without a spending bill or a continued resolution bill being passed resulting in a federal government shutdown, the second time in 2018.
¨ Rating Actions - Fitch downgraded the ratings on Thai Beverage Public Company Limited (ThaiBev) from BBB/Neg to BBB-/Sta; Moody’s has revised the outlook on Beijing Energy Co. Ltd. (BEH) upward from A3/Neg to A3/Sta; Moody’s has revised the outlook of Central Bank of India (CBI) and Indian Overseas Bank (IOB) from Ba3/Sta to Ba3/Pos; S&P has revised upward the outlook on Mitsui & Co. Ltd. from A/Neg to A/Sta, along with its overseas subsidiaries and insurer Insurance Company of Trinet Asia Pte. Ltd; Moody’s has revised downwards on the outlook of PT Lippo Karawaci Tbk from B1/Sta to B1/Neg; Moody’s has changed the outlook on QBE Insurance Group Limited (QBE) lower from Baa1/Sta to Baa1/Neg; Fitch has assigned Jiangyin Chengxing Industrial Group Co. Ltd. (Jiangyin Chengxing) with a B/Sta rating; Moody’s assigns A3/Sta to Shandong Hi-speed Group Co Ltd (SDHG); Moody’s assign B2/Sta to Sunriver Holding Group Co Ltd; Fitch assigns B/Sta to Sunriver Holding Group Co Ltd.
Table 1: Index Weekly Movements
Indices | 09-Feb | 02-Jan | Weekly Chg (bps) |
iTraxx AxJ 5y IG | 75.3 | 64.9 | 10 |
SOR 2y (%) | 1.71 | 1.67 | 5 |
SOR 5y (%) | 2.15 | 2.11 | 3 |
Malaysia 5y CDS | 66.6 | 57.2 | 9 |
MGS 3y (%) | 3.37 | 3.37 | 0 |
MGS 5y (%) | 3.59 | 3.60 | -2 |
MGS 7y (%) | 3.90 | 3.92 | -2 |
MGS 10y (%) | 3.92 | 3.89 | 3 |
AAA 5y Spread* (bps) | 73 | 74 | -1 |
AAA 10y Spread* (bps) | 75 | 79 | -4 |
AA 5y Spread* (bps) | 104 | 105 | -1 |
AA 10y Spread* (bps) | 109 | 113 | -4 |
Source: Bloomberg, BNM, RHBFIC *MYR-denominated bonds
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