FW: RHB FIC Credit Market Monthly Review - 5/11/15

RHB FIC Credit Market Monthly Review - 5/11/15

5 November 2015

Credit Market Monthly Review

October 2015

Market Soars on Doves Fondness, but the Hawk Preys   

Market Review

¨   APAC USD: Asian CDS comforted by PBoC rate cut and possible bigger QE by ECB; APAC IG capped a better performance with corporate spreads slashed 20bps to 152bps; HY credits benefitted from overall bullish sentiments with yields narrowing 1.5pp to 8.90%.

¨   SGD: Low-beta property names in focus post-MAS mild easing move; High-Yield (HY) issuers seek consent to loosen covenants; Trikomsel on the verge of default.

¨   MYR: Ringgit bonds back to life as market stabilized; Government bonds ended firmer; Budget 2016 leaves little margin for error.

Flows and Issuance Trends

¨   USD: Pick-up in primary as credit markets sentiment improve.

¨   SGD: Property issuances aplenty in October.

¨   MYR: Primary space flooded with banks/FIs as monthly issuance tripled to MYR10.6bn.

Sector Highlights

¨   MY Banking – Banking system stayed healthy, loan growth expected to moderate ahead.

¨   SG Banking – Flattish profit growth, asset quality worsened.

¨   CH Banking – Compression in NIM while asset quality generally deteriorated; Big Five* banks continue to exhibit strong capitalization.

¨   SG Property – Positive earnings from REITs as defensive credits.

Rating Trends

¨   Upgrade of Korean SOEs drives upgrade/downgrade ratio higher in October.

Outlook

¨   Easing measures by central banks to keep bond performance afloat.