CIMB Daily Fixed Income Commentary - 18 March 2015

Good Morning,

Market Roundup

• US Treasury yield curve ended flatter, as the longer term yields dragged lower by the weaker-than-expected housing starts. The February reading came in at 897k, much lower than the 1040k estimated by consensus.
• Malaysian sovereign yield curve closed marginally steeper, with front end of the curve attracted better bidding interest. On top of that, market saw heavy transactions, aided by decent buying interest along the short and medium term GII papers.
• Thai government bonds hovered at prior levels, amid heavier flows in the market. Despite foreign players remained the net sellers since Mar 6, in conjunction with weakening THB, the foreign selling pressure was well absorbed by the local players.
• Indonesia government bond market traded up on auction day, as MoF downsized the bond issuance to IDR6.75 T from IDR10 T initial indicative target. Incoming bid amounted to IDR17.28 T, while government received 38% of bid from FR69 (5yr), which recorded a high bid-to-cover ratio of 5.74x. On top of that, the central bank maintained the BI rate unchanged at 7.50% and Fasbi (deposit facility) rate unchanged at 5.50%, which drove USD/IDR lower to 13,175. After the announcement, market showed better bidding interest especially on 10yr and shorter dated buckets, led by FR70 and FR69. Volume eased to IDR 11.6 trillion and the most traded bonds were benchmark FR68 and FR70.
• Asian dollar credit market ended slightly weaker, as investors preferred to stay at the sidelines well ahead of the FOMC meeting. However, Kaisa Mar’18 continued moving higher to 57.02pts from the low of 49.51pts early last week, despite the company was found making losses during its due diligence work by Sunac.