AsianBondsOnline Newsletter (8 June 2015)

To read the full report, data and graphs go to http://www.asianbondsonline.adb.org/newsletters/abowdh20150608.pdf?src=newsletter&id=uWidK3KdmgXVUWes9IgIcqKp1miwxx

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News Highlights - Week of 1 - 5 June 2015

Consumer price inflation in Indonesia rose to 7.2% year-on-year (y-o-y) in May from 6.8% y-o-y in April. In the Republic of Korea, inflation rose marginally to 0.5% y-o-y in May from 0.4% y-o-y in April. In the Philippines, inflation slowed to 1.6% y-o-y in May from 2.2% y-o-y in April. Meanwhile, Thailand’s Consumer Price Index fell 1.3% y-o-y in May, the fifth consecutive month of deflation.

*     Malaysia’s trade surplus narrowed to MYR6.9 billion in April from MYR7.8 billion in March as exports contracted at a more rapid pace than imports. Exports contracted 9.2% month-on-month (m-o-m) in April to MYR60.4 billion, while imports decreased 8.8% m-o-m to MYR53.5 billion. The Republic of Korea’s current account surplus amounted to US$8.1 billion in April, lower than March’s surplus of US$10.4 billion.

*     The People’s Republic of China’s (PRC) non-manufacturing Purchasing Managers Index (PMI) fell to 53.2 in May from 53.4 in April. The decline was driven by the fall in the employment sub-index, which dipped to 47.6 from 48.9 in the previous month. Singapore’s (PMI) rose to 50.2 in May from 49.4 in April, indicating an expansion in manufacturing after 5 consecutive months of contraction. 

*     Real gross domestic product (GDP) growth in the Republic of Korea stood at 0.8% quarter-on-quarter (q-o-q) and 2.5% y-o-y in 1Q15, based on preliminary estimates of The Bank of Korea released last week. The q-o-q growth rate is the same as the advance estimate announced by the central bank on 23 April, while the y-o-y figure is 0.1 percentage points higher.

*     Bank Indonesia revised the foreign exchange regulations for banks to help deepen the foreign exchange market and reduce volatility in the rupiah. The People’s Bank of China announced regulations allowing banks to issue certificates of deposit, which will carry an interest rate that is more market-driven than traditional deposits.   

*     Nomura Holdings of Japan raised KRW150 billion from its dual-tranche bond sale in the Republic of Korea last week. The bonds—issued by Nomura International Funding—comprised a KRW50 billion 10-year note priced at 3.1% and KRW100 billion of 15-year paper at 3.8%. Both securities are callable after 1 year. Khazanah Nasional Bhd. issued MYR100 million worth of 7-year Sustainable and Responsible Investment sukuk (Islamic bonds) via a special purpose vehicle, Ihsan Sukuk Bhd. The sukuk was priced at 4.3%. The proceeds shall be used to fund schools under the Yayasan AMIR Trust School Programme.   

*     Last week, China Three Gorges Corporation issued a dual-currency multi-tranche bond. The US$700 million 10-year tranche was priced at a yield of 3.705% and a coupon rate of 3.7%. The EUR700 million 7-year tranche was issued at a yield of 1.77% and a coupon rate of 1.7%. Woori Bank in the Republic of Korea raised US$500 million from its sale of a US$-denominated bonds carrying a coupon rate and yield of 5.0%. The bond has a tenor of 30 years, is callable every 5 years, and will roll over in perpetuity if the issuing bank does not redeem it.

*     Government bond yields rose for all tenors in Indonesia, Viet Nam, and Singapore; and for most tenors in Hong Kong, China; Malaysia; and Thailand. Yields fell for most tenors in the PRC and the Republic of Korea. Yield movements were mixed in the Philippines. Yield spreads between 2- and 10-year tenors widened for all markets except for Viet Nam.

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