AsianBondsOnline Newsletter (5 May 2014)

To read the full report, data and graphs go to http://www.asianbondsonline.adb.org/newsletters/abowdh20140505.pdf?src=newsletter&id=uWidK3KdmgXVUWes9IgIcqKp1miwxx

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News Highlights - Week of 28 April - 2 May 2014

Consumer price inflation in Indonesia stood at 7.25% year-on-year (y-o-y) in April, down slightly from March's inflation rate of 7.32%, largely stemming from slower hikes in food prices. In the Republic of Korea, consumer price inflation climbed to 1.5% y-o-y in April from 1.3% in March. Clothing and footwear recorded the highest y-o-y increase in April (5.1%). Meanwhile, consumer price inflation in Thailand stood at 2.4% y-o-y in April, up from March's inflation rate of 2.1%.

*     In March, Indonesia's exports of goods rose 1.2% y-o-y following a 3.0% decline in February, while its merchandise trade surplus stood at US$0.7 billion for the month. Hong Kong, China's trade performance improved in March as the trade deficit narrowed to HKD$50.4 billion as a result of a 3.4% y-o-y increase in exports and 3.2% growth in imports. Thailand's current account surplus widened to US$8.2 billion in 1Q14, largely stemming from a larger drop in merchandise imports than in exports.

*     The Republic of Korea's current account surplus widened to US$7.3 billion in March from US$4.5 billion in February, led by a monthly increase in the merchandise trade surplus and a m-o-m drop in the services account deficit. Meanwhile, its trade surplus in goods widened further in April to end at US$4.5 billion for the month.

*     The People's Republic of China's (PRC) Purchasing Managers Index (PMI) for manufacturing rose to 50.4 in March, indicating an expansion in the manufacturing economy. Manufacturing production in the Republic of Korea expanded 0.9% month-on-month (m-o-m) and 2.8% y-o-y in March. In Thailand, the Manufacturing Production Index (MPI) fell 10.4% y-o-y in March following a revised contraction of 4.7% in the previous month. In Japan, industrial production slightly increased 0.3% m-o-m and 7.0% y-o-y in March. Lastly, Viet Nam's Industrial Production Index (IPI) rose 6.0% y-o-y in April after gaining 4.7% in March.

*     Last week, the Bank of Japan (BOJ) announced that it would maintain its monetary easing measures. Standard & Poor's (S&P) affirmed Indonesia's sovereign credit ratings at BB+ with a stable outlook.

*     In the Republic of Korea, over-the-counter (OTC) bond trading rose to KRW467.3 trillion in March from KRW402.1 trillion in February, and the average daily OTC bond trading volume climbed to KRW22.2 trillion in March from KRW20.1 trillion in February.

*     Last week, China Power International Development priced a CNH2.0 billion 3-year bond at a coupon rate of 4.5%, while KfW, a German development bank, priced a CNH1.0 billion 2-year bond at a yield of 1.375%.

*     CLP Power, Hong Kong, China's electricity company, issued a US$500 million perpetual bond callable in 5.5 years at a floating rate that resets every 5.5 years based on the 6-month LIBOR plus a spread of 229.7 basis points (bps). State Grid Corporation of China issued a multi-tranche bond with a 5-year US$1.25 billion tranche at 2.75%, a 10-year US$1.6 billion tranche at 4.125%, and a 30-year US$650 million tranche at 4.85%. Korea Land & Housing Corporation issued a US$500 million 3.25-year bond at a coupon rate of 1.875%, while Korea Resources Corporation priced a US$340 million 5-year bond at a coupon rate of 2.875%. 

*     Government bond yields fell last week for all tenors in Hong Kong, China, and for most tenors in Republic of Korea, Malaysia, Singapore, and Viet Nam. Yields rose for most tenors in Indonesia and the Philippines. Yield movements were mixed in the PRC and  Thailand. Yield spreads between 2- and 10-year tenors widened in Indonesia, Philippines, and Thailand, while spreads narrowed in other emerging East Asian markets.

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