¨ Asian Credits Ended Firm; Keppel Wins SGD100m Orderbook; Jambatan Kedua Issuing Up to MYR2.6bn

21 July 2016

Credit Markets Update

¨      Asian Credits Ended Firm; Keppel Wins SGD100m Orderbook; Jambatan Kedua Issuing Up to MYR2.6bn

APAC USD Credit Market: Asian credits were stable as IG spreads and average non-IG bond yields traded 1-2bp tighter at 200.8bps and 6.35% respectively, while iTraxx AxJ was unchanged at 119.6bps amid mixed Asian equities markets. Over to the US, treasury yields weakened 2-3bps across the curve on an extended rally in US equity markets, long-ended 10y and 30y added 3bps to 1.58% and 2.30% respectively. Moving to new issuances, bond deals by China Minmetals Corp (Baa1/NR/BBB+) were well received with the USD300m 5y getting BTC of 6.6x at T+205bps (IPT: +235bps), while USD700m 10y bond garnered BTC of 5.0x at T+265 (IPT: +290bps). BOCOM Leasing (Issue rating: NR/A-/NR) priced USD300m 3y 2.54% bond at T+170bps. In the pipeline, Chinese property player Greenland HK (Ba2/BB-/NR) may sell USD Benchmark 3y bonds later today with IPT set at 4.625%. ANZ (Aa2/AA-/AA-) may price USD 5y bond at IPT +125bps, whereas China Railway (A3/A-/BBB+) may sell USD benchmark 10y bonds at IPT+205bps. Furthermore, investment fund China Minsheng Investment (Unrated) will have investor meetings from tomorrow in Hong Kong and Singapore for potential USD bond deal, similarly EXIM India (Baa3/BBB-/BBB-) will meet with investors in Asia and US for potential USD bond issuance.

¨      SGD Credit Market: Keppel Corp wins SGD100m orderbooks. There was a rise in the short-to-mid SOR curve by between 6-7bps, with the 2y and 5y closing at 1.39% and 1.67% respectively. Commodity-related names saw interest, with papers like SCISP, OLAMSP and SMMSP trading tighter (according to Bloomberg). Keppel Corp (NR) announced that it has won the contract for 3 dredgers worth SGD100m, adding onto its comfortable orderbook of SGD8.6bn (as of end-Mar). Meanwhile, Ascott Residence Trust (Baa3/-/-) announced their 2Q16 results which saw net income rise by 31% YoY to SGD56.7m largely on the back of acquisitions in Melbourne, New York and Japan.

¨      MYR Credit Market: Govvies ended mixed on quiet trading session as MYR weakened for the 3^rd consecutive day. The local currency weakened (+0.6%) to 4.0275/USD following slower-than-expected inflation of 1.6% YoY in Jun (consensus: 1.8%, May: 2.0%) largely due to lower transportation costs. Focus today will be the 5y GII Reopening auction with WI was seen traded at higher range of 3.36-3.37%, compared to the cash market closing of 3.32% in the previous day. Corporate activities stayed above MYR600m with top traded bonds ended firmer. Notably, Danga 2/26 (-3bps to 4.157%), MACB ’22-’24 declined 18-24bps to 4.138-4.208% while DanaInfra 4/25 settled at 4.05% (-21bps). Meanwhile, Maxis’ net profit increased by 17% YoY to MYR1bn in 1H16 despite the price war in the domestic telco industry. Its parent company, BGSM (AA3), was lasted traded at 5.04% for IMTN maturing 3/26. Jambatan Kedua (GG) is planning to issue up to MYR2.6bn, 7y-25y at IPT ranging 3.84%-4.87% (MGS+ 45-65bps).