Credit Market Watch: Summary for week ending 10-April_20150413

Credit Market Watch: Summary for week ending 10-April

·         MYR Credit:

Ø  Buying interest was strong for AAA papers which led to some names such as Telekom, Plus and Aman tightening. Some GGs tightened further while others were flat based on MTM levels. AAAs continue to offer decent spreads of around 60bps and are better for carry than GGs. The AA space also saw active trading, mostly in the AA3/AA- curve. RHB Investment bank issued its Basel 3 10NC5 at 4.95%.

Ø  Relative value:   Bahrain Mumtalakat is trading 71bps wider than our fitted line likely due to RAM recent outlook revision to negative in addition to yield premium attached to foreign names. We continue to think long Tanjung Bin Power'24/25 and YTL Power offer some value.

·         Asian USD Credit:

Ø  UST weakened but Asian credits were broadly positive with spreads tighter across sovereign, IG and HY space despite a shortened week due to Easter/Ching Ming.

Ø  Market was scrambling for Chinese AMC and SBLC papers with names like HRAM, SHENGY, CHALUM and SINOCE being sought after. Real money accounts were seen buying up names like PETMK, CNOOC and Tencent. Korean papers traded a few bps tighter on news of Korea's positive outlook by Moody's.

Ø  Sovereigns INDON and PHILIP were stronger in yields by approx. 3-7bps while MALAYS wrapped up the week flat to slightly weaker. The Government of Malaysia will finish its USD bonds roadshow today in New York.

Ø  Noble Group's USD NOBLSP'20 bonds sank 3.5pt (>80bps) after Muddy Waters published a research note that it is short the shares; this is in addition to previous accusation by Iceberg research. In contrast the MYR NOBLSP'16 had a rather mild 9bps jump in yield.

Ø  Credit rating: Both Korea and India's sovereign ratings are put on positive outlook by Moody's.

·         CDS: Malaysia’s 5y CDS tightened 8bps WoW to 120bps while other regional peers like Philippines and Indonesia were equally stronger.

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