AsianBondsOnline Newsletter (10 August 2015)

To read the full report, data and graphs go to http://www.asianbondsonline.adb.org/newsletters/abowdh20150810.pdf?src=newsletter&id=uWidK3KdmgXVUWes9IgIcqKp1miwxx

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News Highlights - Week of 3 - 7 August 2015

Consumer prices in Indonesia rose 7.3% year-on-year (y-o-y) for the second month in a row in July. In the Republic of Korea, consumer prices rose 0.7% y-o-y in July, the same rate of increase as June’s. In the Philippines, inflation eased to 0.8% y-o-y in July from 1.2% y-o-y in June. In Thailand, the Consumer Price Index fell 1.0% y-o-y in July, marking the seventh consecutive month of a y-o-y decrease in the economy’s overall consumer prices. Consumer prices in the People’s Republic of China (PRC) rose 1.6% y-o-y in July from 1.4% y-o-y in June. In contrast, producer prices fell 5.4% y-o-y in July following a decline of 4.8% y-o-y in June.

*     Economic growth in Indonesia continued to slow to 4.67% y-o-y in 2Q15 from 4.72% y-o-y in 1Q15. The slower economic growth was due mainly to weak investment growth and moderating growth in both government consumption and household consumption.

*     At its monetary policy meeting on 7 August, the Bank of Japan announced that it would maintain its monetary easing measures. The Bank of Thailand’s Monetary Policy Committee decided on 5 August to maintain the policy rate at its current level of 1.50%.

*     Singapore’s Purchasing Managers Index fell to 49.7 in July from 50.4 in June, indicating a contraction in the manufacturing economy. The fall in the index was primarily due to a decline in new orders, production output, and new export orders.

*     Malaysia’s trade surplus widened to MYR8.0 billion in June from MYR5.5 billion in May as exports increased at a faster pace than imports. Exports rose 6.3% month-on-month (m-o-m) in June to MYR64.3 billion from MYR60.4 billion in May, while imports increased 2.4% m-o-m to MYR56.3 billion in June from MYR54.9 billion in May.

*     Last week, Hong Kong, China issued HKD10 billion worth of inflation-indexed bonds. The bonds have a maturity of 3 years and carry a floating-rate coupon.  The coupon rate will be set at the average of Hong Kong, China’s Consumer Price Index for the previous 6 months or 1.0%, whichever is higher. The Indonesian government sold a total of JPY100 billion of samurai bonds. The issuance consisted of JPY22.5 billion of 3-year bonds priced at a coupon rate of 1.08%, JPY22.5 billion of 5-year bonds priced at 1.38%, and JPY55.0 billion of 10-year bonds priced at 0.91%. Neither the 3-year nor 5-year bond has a guarantee, while the 10-year bonds carries a guarantee from the Japan Bank for International Cooperation.

*     Last week, Central Pattana, a property developer in Thailand, sold a THB1.4 billion 3-year bond carrying a yield of 2.14%, a THB1.4 billion 5-year bond at 2.88%, and a THB0.8 billion 7-year bond at 3.45%. TPI Polene, a cement manufacturer in Thailand, raised THB15.6 billion from a multi-tranche bond sale. The issuance comprised a THB3.0 billion 3-year bond with a yield of 4.1%, a THB2.8 billion 4-year bond at 4.4%, a THB2.2 billion 5-year bond at 4.65%, a THB3.6 billion 6-year bond at 4.9%, and a THB4.0 billion 7-year bond at 5.2%.

*     Government bond yields fell last week for all tenors in the PRC and Thailand; and for most tenors in the Republic of Korea and Singapore. Yields rose for all tenors in Malaysia except for the 6-month tenor which was left unchanged. Yield movements were mixed in Hong Kong, China; Indonesia; Philippines; and Viet Nam. Yield spreads between the 2- and 10-year tenors narrowed for all markets except for the PRC and Viet Nam.

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