AsianBondsOnline Newsletter (21 September 2015)

To read the full report, data and graphs go to http://www.asianbondsonline.adb.org/newsletters/abowdh20150921.pdf?src=newsletter&id=uWidK3KdmgXVUWes9IgIcqKp1miwxx

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News Highlights - Week of 14 - 18 September 2015

Emerging East Asia’s bond markets came under pressure in 2Q15 amid concerns over softer growth, depreciating currencies, and United States (US) interest rates, according to the Asian Development Bank’s latest Asia Bond Monitor. The report notes that the region’s local currency (LCY) bond market grew to US$8.6 trillion at end-June from US$8.3 trillion at end-March. It also notes that the region’s sukuk (Islamic bond) market held firm despite headwinds from developments in the global economy. For a copy of the full report, please click on the following link: https://asianbondsonline.adb.org/documents/abm_sep_2015.pdf?src=newsletter

*     Bank Indonesia’s Board of Governors decided on 17 September to keep its benchmark interest rate steady at 7.50% and to maintain the deposit facility rate and the lending facility rate at their current levels of 5.50% and 8.00%, respectively. The Bank of Thailand’s Monetary Policy Committee decided on 16 September to hold the policy rate at 1.50%. 

*     The Bank of Japan’s Policy Board decided on 15 September to continue with the central bank’s asset purchase program—which involves purchasing Japanese Government Bonds to increase its outstanding amount at an annual rate of JPY80 trillion—and with its money market operations of increasing the monetary base by JPY80 trillion per year. 

*     The Republic of Korea’s Producer Price Index fell 4.4% year-on-year (y-o-y) and 0.5% month-on-month (m-o-m) in August, a faster pace of decline compared with decreases of 4.0% y-o-y and 0.4% m-o-m in July.     

*     Indonesia’s merchandise trade surplus narrowed to US$0.4 billion in August from US$1.4 billion in July. In Japan, exports of goods grew 3.1% y-o-y to JPY5.9 trillion in August and merchandise imports contracted 3.1% y-o-y to JPY6.5 trillion in the same month. Singapore’s non-oil domestic exports dropped 8.4% y-o-y in August, following a 0.7% y-o-y fall in July.  

*     In the Philippines, the current account surplus stood at US$2.8 billion in 2Q15, down from its 2Q14 level of US$3.1 billion, due to a y-o-y widening in the trade-in-goods deficit. Personal remittances from overseas Filipinos rose 0.5% y-o-y in July and 4.6% y-o-y in January–July. 

*     Foreign investor net bond sales in the Republic of Korea amounted to KRW0.2 trillion in August, down from KRW2.6 trillion in July.

*     Swire Pacific, based in Hong Kong, China, priced last week a US$500 million 10-year bond with a 3.875% coupon to yield 3.888%.  

*     Standard & Poor’s raised its foreign currency long-term issuer credit rating for the Republic of Korea to AA- from A+, and lowered its foreign currency long-term issuer credit rating for Japan to A+ from AA-.  

*     LCY government bond yields fell last week for all tenors in Malaysia and for most maturities in the People’s Republic of China (PRC); Hong Kong, China; Indonesia; the Republic of Korea; Singapore; Thailand; and Viet Nam. Yields rose for most tenors in the Philippines. Yield spreads between the 2- and 10-year tenors widened in Malaysia, the Philippines, and Viet Nam, while spreads narrowed in the PRC; Hong Kong, China; Indonesia; the Republic of Korea; Singapore; and Thailand.   

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