Credit Market Watch: Summary for week ending 17-April

Credit Market Watch: Summary for week ending 17-April

·         MYR Credit:

Ø  Liquidity in the GG space was lower but AAA-rated segment was reasonably active with spreads in the 9y/10y vicinity narrowing led by the tight pricing of Putrajaya. Putrajaya priced its 7y and 10y papers with size of MYR100m each at 4.25% and 4.40% respectively earlier last week. Sarawak Energy organised an investor meeting last week with potential new issuance.

Ø  Relative value:  The AAA names in the 9y/10y vicinity such as Telekom, Plus and Putrajaya appear to be fairly priced along our fitted line. While on the AA1 fitted line traded yields were slightly more dispersed with the usual candidate YTL Power continue to offer some value.

·         Asian USD Credit:

Ø  UST rallied WoW but Asian credits were somewhat wider with JACI sovereign, IG and HY higher by 4-10bps.

Ø  Sovereigns performed differently: The MALAYS curve bull-flattened on the back of its new issue being priced at the very tight end even tighter than the higher-rated PETMK, but the INDON curve generally was weaker by 3-8bps WoW while PHILIP was steady.

Ø  The focus of the week was on new issues, among which include China Cinda, Industrial Bank of Korea, China Communication Construction, Formosa Plastics, Central China Real Estate and Haitong Securities.

Ø  PBoC cut RRR for banks by 1% which is higher than expected by market and Chinese property names should be among the beneficiaries.

·         CDS: 5y CDS spreads of EM Asia peers widened across the board WoW. Indonesia 5y CDS was the worst performer rising 12bps while Malaysia, Philippines and Thailand’s 5y CDS were higher by 4-6bps WoW.

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