Credit Market Watch: Summary for week ending 27-Nov

Credit Market Watch: Summary for week ending 27-Nov

·         MYR Credit:

Ø  MGS curve was stronger by 6bps along the belly and 15bps at the 3y point WoW. The positive sentiment extended to the MYR credit market as more volume traded WoW (MYR1.7b vs MYR1.1b), mostly front end and belly bonds.

Ø  This morning, Cagamas opened book for MYR435m 7y sukuk with IPG at 4.68-4.72%, representing 57-61bps spread over MGS.

Ø  Rating updates: TTPC and Jati's ratings were affirmed at AA1 and AA3 respectively by RAM with stable outlooks.

Ø  Relative value:  TBEI'27 offers value being last traded 33bps above our fitted line. Dana' Nov 45 tightened to 5.08% narrowing its spread over Dana' Apr 45 which was last traded at 5.02%.

·         Asian USD Credit:

Ø  This week is data-heavy. China's SDR status will be decided today as IMF officials meet in Washington. ECB to meet on 3 Dec with expectation of deposit rate cut and more assets purchase. Yellen to speak on 3 Dec and US nonfarm payrolls on 4 Dec. OPEC to meet on 4 Dec.

Ø  Last week UST curve flattened WoW with the 10y UST yield falling 4bps while the 2y point was unchanged. Asian credit was quieter due to the Thanksgiving holiday. JACI composite +4bp, JACI IG +3bps and JACI HY +9bps WoW.

Ø  Sovereigns: INDONs and PHILIPs traded softer in prices. Edra's power asset sale boosted sentiment toward the Ringgit and Malaysian names. MALAYSs saw demand with good two-way flows tightening by approx. 4-5bps WoW. Similarly on OGIMK'23, the USD-denominated 1MDB bond maintained its strong momentum taking the multi-week rally further with a 17bps gain WoW.

Ø  New issue: Bank of East Asia issued USD650m AT1 PerpNC5 at 5.50%, which looks decent comparing to similar AT1s. Guangdong Rising AM sold USD500m 5y bond with SBLC from China Development Bank at +120bps.

Ø  Rating changes: Parkson's outlook was revised to negative by Moody's. China Fishery was downgraded to SD by S&P after failing to pay a loan instalment. Noble Group was on negative outlook by S&P following Moody's move.

·         CDS: EM Asia 5y CDS spreads widened with Indonesia +10bps, Philippines +4bps and Malaysia +1bp WoW.