AsianBondsOnline Newsletter (16 March 2015)

To read the full report, data and graphs go to http://www.asianbondsonline.adb.org/newsletters/abowdh20150316.pdf?src=newsletter&id=uWidK3KdmgXVUWes9IgIcqKp1miwxx

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News Highlights - Week of 9 - 13 March 2015

Policy interest rates were lowered in the Republic of Korea and Thailand last week. The Bank of Korea’s Monetary Policy Committee decided on 12 March to reduce the base rate by 25 basis points to 1.75% in order to support economic growth of the Republic of Korea amid low inflationary pressures. In Thailand, the Bank of Thailand’s Monetary Policy Committee decided on 11 March to decrease the 1-day repurchase rate by 25 basis points to 1.75% in order to buttress the country’s economic recovery and reinforce private sector confidence.

*     Consumer price inflation in the People’s Republic of China (PRC) accelerated to 1.4% year-on-year (y-o-y) and 1.2% month-on-month (m-o-m) in February from 0.8% y-o-y and 0.3% m-o-m in January, buoyed by accelerating food price increases.

*     The Producer Price Index (PPI) of the PRC fell 4.8% y-o-y in February following a 4.3% y-o-y drop in January. In Japan, the PPI climbed 0.5% y-o-y in February after inching up 0.3% y-o-y in January.

*     Philippine merchandise exports fell 0.5% y-o-y to US$4.4 billion in January, with decreases in five out of the 10 major exportable items. Japan remained the top export market of the Philippines in January.

*     In the PRC, industrial production grew 6.8% y-o-y in January–February, down from 7.9% y-o-y growth in December, while investment in fixed assets increased 13.9% y-o-y in January–February, down from December’s growth of 15.7% y-o-y. Malaysia’s industrial production growth decelerated to 7.0% y-o-y in January from 7.4% y-o-y in December due to a moderation in the growth of manufacturing production.

*     Household loans of depository corporations in the Republic of Korea expanded 8.9% y-o-y to level off at KRW746.5 trillion at end-January, according to data from The Bank of Korea. 

*     Petronas, a Malaysian state-owned oil company, raised US$5 billion from the sale of three conventional bonds—a US$750 million 7-year bond priced at 3.125%, a US$1.5 billion 10-year bond at 3.5%, and a US$1.5 billion 30-year bond at 4.5%—and a 5-year sukuk worth US$1.25 billion at 2.707% last week. Hutchison Port Holdings Trust raised US$1 billion last week from a dual-tranche bond sale, which comprised of a US$500 million 3-year bond carrying a yield of 2.324% and a US$500 million 5-year at 2.977%. Meanwhile, Beijing Infrastructure Investment priced a EUR500 million 3-year bond carrying a 1.0% coupon last week.

*     Last week, Industrial Bank of Korea sold a KRW330 billion 30-year Tier 1 note callable in 10 years at a 4.33% coupon and another 30-year Tier 1 note worth KRW70 billion callable in 5 years at a 3.84% coupon. Easy Buy, a consumer financing company in Thailand, issued a THB1.5 billion 3-year bond at a 3.57% coupon and a THB1 billion 5-year bond at 4.1% last week.

*     The PRC set its gross domestic product (GDP) growth rate target for 2015 at around 7%. For comparison, its 2014 actual and target GDP growth rates stood at 7.4% and 7.5%, respectively.

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

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