Frasers Hospitality REIT’s SGD Perps Well-Received; MEX II Rallied in MYR Secondary

6 May 2016

Credit Markets Update

           

Frasers Hospitality REIT’s SGD Perps Well-Received; MEX II Rallied in MYR Secondary

¨      APAC USD Credit Market: Asian CDS narrowed ahead of US job data to 144.7bps (-1.7bps) whereas IG spreads and average yield of non-IGs were stable at 215.72bps and 7.27% respectively. Meanwhile, yields of USTs declined by 2-3bps with 5y and 10y at 1.20% and 1.75% respectively after the initial jobless claims rose 17k to 274k, from 260k expected. Attention will be on April jobs data later today with expectations of NFP at 200k (prior: 215k) and jobless rate of 4.9% from 5.0%. On ratings, Moody's affirmed the A3/Neg of COFCO HK on the premise of its close integration with COFCO Corp (the largest agriculture and food supplier in China) and expectation of high Chinese government support and improvement in credit profile.

¨      SGD Credit Market: FHTSP’s SGD100m Pnc5 was well received. SOR 2y and 5y ticked 0.4-1bp lower to 1.63% and 1.99% respectively. Trades were led by NOLSP and ARTSP which saw two-way flows, while DBS subs (LT2 21c16, LT2 22c17, B3T223c18) and AT1 Pc18 traded a tad firmer (according to Bloomberg). Elsewhere, yields narrowed for CWTSP 17-20s, STHSP 9/22 and TGRSP Pc20; while AREIT 17, 21 and Pc20 and OHLSP 17-19 were unchanged following result releases. In the primary, Frasers Hospitality REIT (FHTSP, NR) priced SGD100m Pnc5 at 4.45% (IPT 4.75% area), with orderbook in excess of SGD500m.

¨      MYR Credit Market: MGS curve continued the upward shift with the 7y and 10y MSG closing at 3.81% (+1bp) and 3.90% (+2bps) respectively as MYR breached the psychological resistance level of 4.00 against the greenback. Meanwhile, the auction for the MYR2.5bn 15y GII Reopening received strong BTC of 2.62x averaging at 4.417%, 17bps higher from similar auction in March last year. Heavy flows of MYR2.2bn were seen in the corporate market, boosted by trades on the new MEX II 4/21-4/34 rallied as yields fell 15-37bps to 4.949%-6.16% with total volume of MYR1.47bn. In the primary market, Sabah Development Bank (AA1) is auctioning MYR160m 1y MTN (tender closing today, 6-May).