Credit Market Watch: Summary for Week Ending 27-March_20150330

Credit Market Watch: Summary for week ending 27-March

·         MYR Credit:

Ø  Trading activity was dominated by GGs this week and GG yields tightened throughout the week. Danainfra's new bonds were also sold at rather tight pricing levels: 1) 7y MYR600m at 4.15% (upsized by MYR200m), 2) 10y MYR300m at 4.33%, 3) 15y MYR300m at 4.61% and 4) 20y MYR300m at 4.79%. AAA bonds were well bidded but offers were hard to come by, though Plus 27s to Plus 31s were frequently traded.

Ø  Relative value: AAA bonds at the long end may have good carry value and yields last traded close to our fitted line. We think the YTL Power curve still offers some value.

·         Asian USD Credit:

Ø  UST yields rose marginally WoW. Asian credit market was positive with tighter JACI spreads.

Ø  Sovereigns INDON, MALAYS and PHILIP generally grinded tighter. IG traded with good two-way flows. PETMK curve outperformed stronger by approx. 7-20bps WoW with demand on short covering.

Ø  New issue: Standard Charted sold USD2b AT1 debt (Perp NC5, BB/Ba1) with an overwhelming USD22b book cover at 6.5% coupon, while Beijing Capital (BBB/Baa2) sold USD600m 3y bonds at +200bps on >USD5.5b orders.

Ø  Credit rating: Tencent was upgraded by Moody's from A3 to A2, citing stronger-than-expected performance and sustainable net cash position. On the other hand, Guangzhou R&F was put on negative watch by S&P, Sunac was downgraded to B2 from B1 by Moody's and Kaisa's rating was revised to D by S&P after missing payments on its USD bonds maturing in 2017 and 2020.

·         CDS: Malaysia’s 5y CDS outperformed regional peers last week narrowing 5bps WoW to 135bps. CDS for the rest of the countries that we monitor remained stable.

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