Primary Activity Picked Up; Greenland Holding cut to Ba1

25 May 2016

Credit Markets Update

           

Primary Activity Picked Up; Greenland Holding cut to Ba1

¨      APAC USD Credit Market: Asian CDS traced lower to 145.3bps; IG spreads were marginally lower at 210.5bps, while HY bonds yields widened 2bps to 7.16%. Benchmark UST yields rose across the curve by c.1.3-3.6bps following the gains in US equities markets and better-than-expected April new home sales, which surged 16.6% MoM against expectations of 2.4%, with the 2y adding 1.3bps to 0.90%, while 10y increased 2.8bps to 1.86%. Moving to ratings, Moody’s lowered Greenland Holding and Greenland Hong Kong’s rating to Ba1 and Ba2 with a negative outlook to reflect deteriorating credit metrics and high leverage position, as debt levels from its property segment at Greenland Holdings surged 40% since Dec-14, pushing its debt/capitalization ratio to 78.5%. Primary market activity picked up, as China Three Gorges (A2/A/A) received over USD1.8bn orders for its USD500m 2.3% 5y bond at T+90bps vs. IPT of 110, while it also priced its USD1bn 3.15% 10y bond at T+130bps vs. IPT of 150bps area. CCB Leasing (A2/A/A) sold USD400m 3y bond at T+155bps vs IPT of 175bps area (BTC: 3.2x), and USD600m 5y at T+168bps vs IPT of 190bps (BTC: 2.0x). Additionally, Chinese shoe and sports equipment supplier, 361 Degrees (NR/BB/BB) sold USD400m 5NC3 notes at 7.25%, IPT was at 7.75% area (BTC: 4.0), mainly taken up by fund managers (73%). Furthermore, China Development Bank (Aa3/AA-/NR) may price USD benchmark 5y and 10y bonds today with IPT of T+105 and T+145bps.

¨      SGD Credit Market: Eu Yan Sang seeks early redemption. The 2y and 5y SOR rose by around 4bps to close at 1.75% and 2.08% respectively. Interest was seen in MRTSP and JTCSP while property names like CITSP and FCLSP was around 5bps tighter (according to Bloomberg). Eu Yan Sang International (NR), a traditional Chinese medicine retailer, is seeking consent for early redemption on its outstanding SGD75m EYSAN 6/18 and SGD23.6m EYSAN 11/16 due to its equity privatization exercise. United Engineers Ltd (NR) is printing a SGD5y at initial price of 3.8%. Looking ahead, investors will be eyeing the Singapore April Industrial Production numbers (consensus: -0.2%) to be released tomorrow.

¨      MYR Credit Market: Corporate activity improved 58% to MYR655m led by banking papers. Noticeably, Imtiaz 11/21 closed flat at 4.468%, while Public Islamic B3T2 6/24c19 was 1bp higher at 4.589%. Govvies fell as USDMYR weakened 1% to 4.1235. The 5y and 7y inched 3bps higher to 3.37% and 3.80% respectively, while new 10y MGS benchmark rose 1bp to 3.91% from average auction yield of 3.90%. On the primary front, Mydin (AAA-bg) priced small issuance of MYR55m, 3.5y at 4.70%.