Credit Spreads Tightened as Oil Touches USD50; China Development Bank Priced USD1.6bn Senior

26 May 2016

Credit Markets Update

           

Credit Spreads Tightened as Oil Touches USD50; China Development Bank Priced USD1.6bn Senior

¨      APAC USD Credit Market: Firmer tone in the APAC market as IG spreads and Asian CDS tightened 2bps to 208.6bps and 143.3bps respectively, while HY bonds yields fell 1bp to 7.15% amid higher Brent prices of USD49.7/bbl. UST 5y-30y curve steepened following the 5y auction with 5y decreasing 0.3bps to 1.40% while 30y inched 2bps higher to 2.66%. In the primary market, China Development Bank (AA3/AA-/NR) sold USD1bn 5y at +80 (IPT +105 area) and USD600m 10y at +120 (IPT +145 area). Meanwhile, Fitch has downgraded Beijing Automotive Group to BBB+/stable, from A-, as its FFO-adjusted-net-leverage spiked up to 3.3x in FY15, from 1.7x in the previous year.

¨      SGD Credit Market: United Engineers inaugural 5y print at 3.68%. The short-to-mid SOR curve steepened, with the 2y mildly declining 0.5bps to 1.74% while the 5y rose 0.9bps to 2.09%. Interest was seen in mid-dated high grade property names like CAPLSP and CITSP as well as HY names such as BTHSP and EZISP. Sembcorp Industries (NR) and its subsidiary Sembcorp Marine (NR) announced that EIG Management Company is suing Sete Brasil (and a host of other entities including Sembcorp Industries and Marine) pertaining to USD221m in funds invested in Sete Brasil. In the primaries, United Engineers Ltd (NR) printed a SGD150m 5y at 3.68%, 12bps inside initial guidance.

¨      MYR Credit Market: Secondary trades continue to stay above MYR600m yesterday, with SEB 4/36 being the most active with MYR100m changing hands at 5.06%. Meanwhile, the new CIMBGH AT1 5.80% had another strong rally to MYR102.30 to yield at 5.27% with MYR63m worth of total trades in 11 transactions, led by interest from PB investors. In the GG-segment, Prasarana 22,23 and 31 closed at 4.076%,4.119% and 4.611% respectively with total volume of MYR85m. There were total of MYR2.62bn of govvies traded – yields rose on a rising chance of Fed hike next month with 10y ending 1.3bps higher to 3.917%, 7y at 3.81% (+1.9bps) and 5y at 3.448% (+4.2bps).