Prudential Priced Pnc5 at 5.25%; CLP Holdings Handed Positive Outlook

1 June 2016

Credit Markets Update

           

Prudential Priced Pnc5 at 5.25%; CLP Holdings Handed Positive Outlook

¨      APAC USD Credit Market: APAC Credits Markets strengthened as IG credits spreads and speculative bond yields tightened 2.7-8bps to 207.5bps and 7.06% while Asian CDS was slightly wider by 1.6bps to 141.9bps. Shorter-dated UST yields such as the 2y-5y declined 1-3bps after markets a slew of US economic data such as Apr PCE Core print at 1.6%, alongside Apr personal income and spending prints at 0.4% and 1.0%, whereas May Chicago PMI and Consumer Confidence were below consensus at 49.3 and 92.6 (consensus: 50.5; 96.1). On ratings, S&P revised CLP Holdings’s outlook to Positive; affirmed A- rating, driven by better-than-expected deleveraging effort by the group, complemented by steady operating performance. Elsewhere, Prudential Plc (A2/A+/A) priced its USD1.0bn Pnc5 at 5.25%, IPT at 5.75%. In the pipeline, China State Construction (A2/A/A) and Tianjin Infrastructure Construction (NR/A-/A) is meeting investor in Asia and Europe from tomorrow for potential USD deals.

¨      SGD Credit Market: OUE Commercial REIT rating withdrawn. There was a bull steepening in the short-to-mid SOR curve, with the 2y falling by 1.8bps to 1.76% while the 5y fell by a lesser 0.2bps to 2.14%. Interest was observed in REITs such as CREISP & AREIT as well as KEPSP & SCISP. OUE Commercial REIT has requested the removal of its Ba1/Sta rating by Moody’s, thus becoming an unrated issuer. This follows MAS’ ruling that allows REITs an aggregate leverage limit of 45% (from 35% previously) without a credit rating. In the primaries, GSH Corp Ltd (NR), printed a SGD60m 3y at 5.15%, 10bps inside initial guidance while Starhub Ltd (NR) printed a SGD300m 10y at 3.55%. Investors will be eyeing the Singapore May PMI out tomorrow (consensus: 49.7; previous 49.8).

¨      MYR Credit Market: Secondary flows improved 36% to MYR545m led by financial and infrastructure names. We note gain in B3T2s such as Maybank 10/25c20 which realigned 27bps lower to 4.678%; while PIBB 6/24c19 slipped 1bp to 4.585%. Elsewhere, yields for short-dated Manjung 11/16 and 11/18 fell 2-18bps to 3.567% and 3.895% respectively. On the govvies front, the new 5y MGS benchmark fell 2bps to 3.60%, from average auction yield of 3.62%. Other benchmark yields continued to move upward with the 3y and 10y rising 1-2bps to 3.25% and 3.92% respectively as USDMYR weakened further to 4.1285. Over to the primary market, Sabah Development Bank (AA1) is auctioning MYR70m 2y MTN with tender scheduled to close on 3-Jun.