FW: RHB FIC Credit Market Monthly Review - 6/7/15

RHB FIC Credit Market Monthly Review - 6/7/15

6 July 2015

Credit Market Monthly Review – June 2015

Markets Held Hostage to the Greek Drama but Asian Credits are Rock Solid

Market Review

¨   Greek crisis put markets on the defensive mode; Asian credit affected but valuations still solid.

¨   Singapore’s SOR may steepen in near-term.

¨   Improved return from MYR Bond amid volatile month.

Flows and Issuance Trends

Regional

¨   Supply drops to USD13.64bn on uncertainty over Fed’s tightening.

¨   Korean issues expected to prefund redemption; covered bonds in the pipeline.

Singapore

¨   Property players continue to dominate issuances in SGD; slower 2H15 expected.

Malaysia

¨   Slower primary market.

¨                   

Sector Highlights

¨   CN Banking – The People’s Bank of China cut lending and deposit rates by 25bps each to 4.85% and 2% respectively.

¨   MY Banking – Loans grew +8.9% yoy in May; Falling average lending rate; Mild deterioration in asset quality.

¨   TH Banking – Asset quality to moderate, however strong loss absorption capacity.

¨   SG Banking – Senior creditors are excluded from the new bail-in proposal.

¨   MY Wireless Telcos – Maintain marketweight.

¨   SG O&G (OSV) – Offshore Support Vessels (OSV) space remains afloat.

¨   APAC Power/Energy – Credit profile improved for Power/ Energy players in APAC as fuel costs stay cheap.

Rating Trends

¨   Wave of revisions on Moody’s new bank methodology and mixed rating actions observed in APAC; Weaker financials key reason for rating downgrades in MYR space.

Outlook

¨   Asian credits to stay resilient amid rising volatility.