Eyes On Yellen’s Speech; Gas Malaysia New MYR700m Debt Programme

26 August 2016

Credit Markets Update

Eyes On Yellen’s Speech; Gas Malaysia New MYR700m Debt Programme

¨      APAC USD Credit Market: Asian credits markets widened ahead of the Jackson Hole Symposium. Both IG spreads and speculative bonds yields traded wider by 1.5bps to 186.2bps and 6.26% respectively. Similarly, the iTraxx AxJ IG added approximately 2bps to 113.2bps. USTs weakened on the back of the stronger-than-expected July durable goods print which grew 4.4% (consensus: 3.4%; revised: -4.2%) and initial jobless claims which dipped to 261k (consensus: 265k; prior: 262k). Accordingly, benchmark yields added 1-3bps across the curve with the shorter-dated 2-3y rising 3bps each to 0.79% and 0.89% respectively, while the 10y increased 1bp to 1.57%. Elsewhere, Brent oil settled 1.3% higher overnight at USD49.7bbl.

¨      SGD Credit Market: Higher grade/quasi names see interest. The short-to-mid curve bull flattened, with the 5y dipping by 5bps to 1.64% while the 2y fell 3.5bps to 1.42%. Sabana REIT (NR) announced that it has secured a 3.5y SGD108m revolving facility to replace its existing facilities. Higher grade papers traded tighter, on names such as short-to-mid dated HDBSP, LTAZSP and AREIT, as well as some riskier flows into papers like EZISP and HYFSP.

¨      MYR Credit Market: Weaker demand for 10y MGS auction as investors remain cautious before Jackson Hole sysmposium.  The 10y MGS 11/26 (reopening) auction came in at average yield of 3.563%, with weaker BTC of 1.75x against 2.19x previously. Trading in MYR credits remained above average at MYR624m. Among the top traded were the PLUS 1/30 (unchanged at 4.430%), PTPTN 12/24 (+0.1bps to 4.029%) and Prasarana 11/20 (-63.1bps to 3.673%). MMC (AA-) reported a 90.4% YoY fall in net profit to MYR133.9m in 2Q16, as the previous corresponding quarter’s net profit was boosted by the MYR1.4bn one-off gains from the listing of Malakoff Corp; although revenue improved 27.9% YoY to MYR950.3m on the back of higher sales from ports and logistics segment (+52.9%). Meanwhile, a new MYR700m ICP/IMTN Programme from Gas Malaysia was assigned with preliminary rating of AAA by MARC, where MYR400m will be utilized for pipeline expansions over the next 5 years.