Credit Market Watch: Summary for week ending 1-May

Credit Market Watch: Summary for week ending 1-May

·         MYR Credit:

Ø  Quiet trading week due to the FOMC meeting and the long weekend. Yields mostly unchanged on WoW basis, while spreads widened slightly. There was buying interest for GGs and AAAs at the belly of the curves but bid-ask spreads were wide. Telekom'24 traded tighter to 4.32% which appear slightly overdone.

Ø  Relative value:  Telekom'24 is last traded rich 9bps under our fitted line while Telekom'21 seems to be at fair value.

·         Asian USD Credit:

Ø  UST curve steepened with the 10y UST rising 20bps while JACI composite was 8bps lower WoW in a quieter holiday-shortened week.

Ø  Sovereigns: INDONs saw selling due to UST weakness, with the INDON curve steeper by ~10bps WoW. The same for MALAYS'25 which saw yield rising 8bps WoW. Mongolia government's outlook was revised by S&P to negative, with bonds only weakened slightly largely because both Moody's and Fitch already have negative outlook on the country.

Ø  In the IG space, BPCL printed a USD500m 10y at +208bps, secondary market saw good two-way flows and was trading at around reoffer level. Market was also on the lookout for selected Korean and Indian names, and Malaysian names like RHBCMK and AMMMK were sought after.

Ø  China HY space was overall positive, helped by accommodative macro measures and the recovery in oil price boosted HY oil names e.g. Anton and Honghua.

Ø  Credit rating: Guangzhou R&F was put on negative outlook by S&P, citing weaker-than-expected results and expect the company's leverage and interest cover to deteriorate in the next 6-12 months.

·         CDS: 5y CDS in EM Asia saw Indonesia 4bps wider, Philippines 1bp wider and Malaysia 1bp tighter while the rest was flat WoW.