Credit Market Watch: Summary for week ending 17-Jul

Credit Market Watch: Summary for week ending 17-Jul

·         MYR Credit:

Ø  Both MGS and PDS markets were quiet in a holiday shortened week. Total PDS trading volume for the week was under MYR1.0b, marking the lowest weekly volume YTD. AAA and GG 9y papers appear to offer more value compared to 10y papers which last traded 3-5bps above the former. Local market likely to remain quiet in the next few days as most players are still away for the Hari Raya holidays.

Ø  On rating updates, RAM withdrew its rating on Gulf International Bank's proposed Sukuk Wakalah MTN programme of up to MYR3.5b.

Ø  Relative value: Similar to most toll road bonds, Besraya'20 is traded at very tight spreads, last traded 20bps under our fitted line.

·         Asian USD Credit:

Ø  UST curve flattened with the 10y lower by 5bps while the front end 2y yield was up 3bps WoW. JACI spreads generally traded tighter.

Ø  Sovereigns in the region widened a tad in spread especially the long-end part of INDON and PHILIP curves. MALAYS'25 was almost flat WoW, while OGIMK'23 continued to regain losses with yield improving by >40bps WoW.

Ø  New issue: BINHCO underperformed widening by almost 20bps at first before stabilising at ~10bps wider across both tranches. Nonghyup Bank's 5y was the only new issue trading tighter than reoffer with Korean names generally better bid. Indian Financials saw good demand at the longer end of the curve with better buyers in the 10-15y sector.

Ø  Credit rating: China Taiping Insurance's LT issuer default rating was upgraded to A from A-. Pakuwon Jati and its guaranteed subsidiary Pakuwon Prima was upgraded to Ba3 from B1 by Moody's, citing strong performance and more balanced split between development and recurring income.

·         CDS: Malaysia’s 5y CDS tightened by 6bps WoW to 122bps, narrowing its spread over lower rated peers of Thailand and Philippines. Other EM Asia CDS levels were little changed.