Moody’s Upgrades GS Caltex; ANZ and ICBC Leasing Priced USD deals; NAB Raised SGD450m B3T2 Capital

13 May 2016

Credit Markets Update

           

Moody’s Upgrades GS Caltex; ANZ and ICBC Leasing Priced USD deals; NAB Raised SGD450m B3T2 Capital

¨      APAC USD Credit Market: Asian markets remain stable with iTraxx AxJ tracing lower to 143.2bps while IG spreads and HY bonds narrowed 0.7-3.4bps to 214.1bps and 7.18%. Benchmark UST yields rose across the curve by 1.5-3.5bps following hawkish comments from Fed policy makers, which push up the shorter dated 2y and 3y by c.3bps to 0.75% and 0.92% respectively, while 10y added 1.5bps to 1.75%. On to ratings, GS Caltex’s rating was upgraded to Baa2 by Moody’s with a stable outlook premised on a healthy financial profile driven by reduction in debt levels, lower capex, steady financial results and supportive industry fundamentals. Moving to primaries, ICBC Financial Leasing (A2/A/A) sold USD1.3bn 3-part deal with USD500m 3y bond at T+157.5bps vs IPT of 170bps area, USD500m 5y at T+170bps vs IPT of 180bps and USD300m 10y at T+200bps, against IPT of 210bps area. Additionally, ANZ (Aa2/AA-/AA-) priced USD1.5bn 10y B3T2 bond at T+265bps, IPT was at high 200s area. Turning to pipeline, Zhejiang Geely (Unrated), a Chinese automaker, is scheduled to meet investors today for a potential USD green bond deal.

¨      SGD Credit Market: NAB issued SGD450m B3T2 capital; March retail sales later today. Short-to-medium swap curve declined with 2y and 5y SOR c.4bps lower at 1.57% and 1.92% respectively. In primary, NAB (Aa2/AA-/AA-) priced SGD450m 12nc7 B3T2 at 4.15%, or 15bps inside initial price guidance with BTC in excess of 2.7x. KrisEnergy recorded a USD20.1m loss in 1Q16 compared to USD47.2m PAT in 1Q15 due to higher depreciation and amortisation expenses while gearing ratio deteriorated to 0.42x from 0.38x as of FY15. Elsewhere, Singapore Airline's FY3/16 net profit increased by 109% to SGD851.8m largely due to lower fuel costs which offset lower passenger and cargo revenue, while debt/equity improved to 0.11x from 0.14x in FY3/15. Later today, retail sales is expected to have grown by 3.6% YoY in March, a recovery from prior month's 3.2% decline.

¨      MYR Credit Market: Benchmark MGS yields were 1-5bps lower with the 10y at 3.87%. Khazanah 9/32, Maybank T2 12/21c16 and CIMB IT1 10/38c18 were actively traded with yields up 2.0-3.1bps to 4.729%, 4.027% and 4.702% respectively. Elsewhere, MRT awarded MYR2.1bn MRT2 contract to Malaysia Resources (MRCB) and IJM; while SP Setia recorded a net profit of MYR139.4m in 1Q16 (from MYR118.3m in 1Q15) aided by 86% take-up on Setia Alam’s projects. On the macro front, industrial production grew at the slowest pace in three months at 2.8% YoY in March from 3.9% in February. 1Q GDP to be released later today is expected to slow to 4.0% YoY from 4.5% in 4Q15.