CIMB MYR and USD Weekly Fixed Income Commentary for 30 Apr 2015

Market Roundup

• Malaysian sovereign bonds ended with marginal gains over the short week, with yields moving in narrower ranges, amid a lack of fresh market drivers. The market was seen under mild net selling pressure during mid-week, triggered by the sell-off in US Treasuries.
• For corporate bonds, longer term investors have been dipping into the secondary market looking for medium- to longer-tenor papers (included Telekom, PLUS and Rantau Abang), which are attracting decent bids but investors are also focused on higher yielding AA rated YTL Power, Anih, Kesturi, TBEI and BGSM. Going forward, we expect Ringgit credits to stay firm until we see more primary deals.
• US 1Q2015 GDP disappointed with print of +0.2% qoq annualized against earlier consensus of +1.0% and the prior quarter’s +2.2%. US Treasuries weakened ahead of and after the latest FOMC meeting. As policymakers held the Fed Funds Rate unchanged, they also indicated that recent sluggish economic growth was due to impact of the winter season as well as other transitory factors. Policymakers left the door open for interest rates normalization, as they expect economic growth to expand moderately and inflation to rise gradually toward the 2% target on a medium term time frame.
• Asian credit market was firm for the week ended Apr 30, as credit spreads were generally tighter due to the rising UST yields. On the hand, secondary trading activities were relatively muted heading toward the long weekend. Oil-related names and Malaysian sovereign-related names were well supported in conjunction with the firmer crude oil prices.