CIMB Daily Fixed Income Commentary - 29 September 2014

Market Roundup

• Players took quick profits and scaled back some gains posted on the Thursday’s rally, alongside with market concerns on potential shift in the Pimco’s portfolio holdings, following the departure of co-founder Bill Gross.
• Ringgit govvies were stood firm at prior levels ahead of weekend, while we saw decent activities along the curve belly, namely MGS Sep’21 and Jul’24. Meantime, short dated GII Sep’14 and Dec’14 garnered a sum of RM530 million worth of trading volume on Friday, while yields closed at 3.45% and 3.23% respectively.
• Thai sovereign bonds posted little gains on Friday, amid increased daily volume totalling Bt24 billion, in contrast to Bt19 billion a day before. Market focus was again on LB196A, which transacted at Bt8.6 billion throughout the day, while yield closed 3bps lower at 2.93%.
• Bond market traded down as market reacted on a new law that enforces indirect regional election by parliament (instead of direct election), and IDR currency entered 12,000 territory. Selling action especially seen in belly and longer end, although support by banks emerged in current level.
• New issues dealt mixed on Friday. Hana Bank priced its Tier-2 paper at 195bps on Thursday, which eventually traded 15bps tighter to 180bps on good demand. Meantime, Bank of Communications Oct’24 widened from 285bps to 292bps. We expect some consolidation along the secondary market in next week due to heavy pipeline issuances, as well as quarterly portfolio rebalancing.