Evergrande Slashed to B+ with Negative Outlook; Suncorp, Perdana Petroleum Priced Deals; Tianjin Railway to Conduct Roadshows

27 April 2016

Credit Markets Update

           

Evergrande Slashed to B+ with Negative Outlook; Suncorp, Perdana Petroleum Priced Deals; Tianjin Railway to Conduct Roadshows

¨      APAC USD Credit Market: Credit moved sideways with IG credit spread holding steady at 210bps, while HY benchmark ended flat at 7.42%, iTraxx AxJ tightening 2.8bps to 140.5bps. USTs fell since last week with the 5y and 10y inching 1.4-1.5bps higher to 1.39% and 1.93% respectively amid better preliminary PMI print of 51.7 for Apr, up from 51.3 in the previous month. In the primary market, Suncorp-Metway (A1/NR/A+) priced 3y bonds at 110bps vs IPT of 130bps area. Meanwhile, Tianjin Railway Transit Group (A2/A-/A) is conducting roadshows starting today for its USD bond issuance. Fitch downgraded Evergrande Real Estate Group to B+, from BB-, with negative outlook premised on its persistently high debt level and headwinds in the Chinese property market.

¨      SGD Credit Market: G8 Education plans early redemption. There was a widening in the short-to-mid curve, with the 2y and 5y rising by around 6bps to close at 1.70% and 2.10% respectively. Interest was seen in Bank/FI names such as OCBCSP and DBSSP AT1 and other IG papers like ANVAU and FORD. G8 Education Ltd is conducting a consent solicitation exercise to allow it to redeem early its SGD260m GEMAU 5/17 which is to be refinanced with a planned issuance, with the goal of extending its average debt maturity profile. Meanwhile, Keppel Corp reiterated that its SGD230m impairment provisioning in 4Q15 for Sete Brasil projects was sufficient (with whom it has a remaining SGD4bn orderbook, or 45% of its total O&M orderbook) even as Sembcorp Marine has launched legal action against Sete Brasil.

¨      MYR Credit Market: MGS yields rose on local headline risk and Fed interest rate caution, with selling pressure seen in 7y-10y benchmark papers which ended at 3.80% (+6bps) and 3.87% (+6bps) respectively. MGS auction of MYR3.0bn 7y re-opening is scheduled to close tomorrow with WI quoted at 3.85/3.77%.Trading volume in corporate space remains light at MYR192m vs. yesterday’s MYR211m, with DanaInfra 11/45 and Gamuda 4/21 being the most traded counters on combined trades of MYR100m. Elsewhere, Tenaga Nasional has signed MYR2.1bn long-term contracts for shipment of coal from Indonesia which allows it to diversify its freight contracts portfolio. Meanwhile, Perdana Petroleum (RAM: AAA(FG)) priced MYR635m 2y-5y IMTN at 4.30%-4.90% for refinancing of its MYR615m borrowings.