CIMB Daily Fixed Income Commentary - 29 August 2014

Market Roundup

• US Treasury yields further declined, buoyed by the demand in safe-haven assets, amid renewed geopolitical tension at Ukraine. Similarly, German bund yields were sent lower by 1-4bps along the curve belly and longer end.
• Malaysian government bonds were actively transacted at RM3 billion, supported by the buying activities along the GII May’24 and MGS Jul’24. Elsewhere, the 10-year GII reopening auction ended with a healthy result, indicated by the decent bid-to-cover ratio of 2.598 times, while average yield was generated at 4.14%.
• Thai govvies posted gains on the back of thin buying interest on Thursday, while volume shrank drastically from Bt28.2 to Bt11.0 billion. Medium term papers LB196A and LB236A were in the limelight, closed lower by 1 and 2bps lower to 3.01% and 3.48% respectively.
• IDR denominated government bond market moved up and still accompanied by hefty volume totaling IDR15.74 trillion, although declined from previous day of IDR18.37 trillion. Most of transactions were done along benchmark series, but we noted that several shorter series also recorded quite significant volume. We saw the market strengthened, underpinned by foreign fund inflows throughout the day.
• Asian dollar credits moved in narrow range and sideways, as market focus was on the newer issuances and pipelines. China Orient dual tranches were held marginally wider by 1bp, from the issue spreads of 225 and 275bps. Meanwhile, the 10-year Link REIT paper was seen quoted 5bps wider from issue spread of 130bps.