Credit Spreads Narrowed as Treasury Yields Rose; More Chinese Companies Face Downgrade

5 May 2016

Credit Market Monthly Review

April 2016

Credit Spreads Narrowed as Treasury Yields Rose; More Chinese Companies Face Downgrade     

Market Review

¨   USD: Treasuries weakened as risk-on sentiment prior to Fed and BOJ meetings was supported by a recovery in oil; Credit spread narrowed, benefitting from the positive global spillover effect.

¨   SGD: Sentiment improved as commodity rallied; O&M reported disappointing results, Sembcorp Marine and Keppel Corp dragged by provisioning; SG property outlook continues to look sluggish.

¨   MYR: Profit taking on rising headline risk.

Demand and Supply Trends

¨   USD: Primaries picked up by c.18% MoM with USD20.0bn deals priced in April vs. March’s USD17.0bn.

¨   SGD: April primaries supported by HDBSP issuance.

¨   MYR: Total YTD bond supply boosted to MYR29.1bn after the strong print of MYR10.6bn in Apr.

Rating Trends

¨   Junk-rated Chinese corporates led rating cuts; upgrade/downgrade ratio of 0.29x in April vs. YTD’s 0.23x.

¨   Moody’s placed Korean banking system on negative outlook; Woori Bank downgraded to A2/Neg.

¨   RAM revised Country Garden Real Estate’s outlook to AA3/Neg.

Outlook

¨   New BNM Governor to chair his first MPC meeting; Investors to gauge on Fed’s direction.