1 August 2016
Credit Markets Weekly
Petronas, Etiqa and Malaysia RE downgraded to A- by
Fitch following change in methodology; Moody’s placed MAHB on negative outlook
APAC
USD CREDIT MARKETS
¨
Investors poured into
USTs as benchmark
yields strengthened 5-11bps WoW driven by the disappointing US 2Q16 GDP at 1.2%
(consensus: 2.5%; 1Q: 1.1%) and plunging oil prices (Brent: -7.1% to
USD42.5/bbl), despite a more hawkish tone in the July FOMC meeting. As a
result, the longer-dated 7-30y were 10-11bps lower at c.1.28%, 1.45%, and 2.18%
respectively. Asian Credit Markets remained firm, Asian CDS was relatively flat throughout the week
at 119.7bps, while both IG credit spreads and non-IG bonds tightened 1-2bps to
197.7bps and 6.34%.
¨
On ratings, Korean
refiners i.e. SK Innovation (SKI) and SK Global Chemicals’ Baa2 ratings were
handed positive outlooks by Moody’s, with the former driven by improving
financial profile, stable earnings and cashflows, that could lead to a decrease
in debt levels, while the latter was also revised given its full ownership by
SKI. Similarly, Moody’s placed Chinese financial leasing companies’ (China
Development Bank Financial Leasing, ICBC Financial Leasing, CCB Financial
Leasing and CMB Financial Leasing) ratings on review for upgrade to
reflect their importance to the parent banks. Fitch slashed Thailand’s PTT
PCL’s rating to BBB+/Sta from A-, following the downgrade of the Thailand
Sovereign rating to BBB+/Sta. PT Lippo Karawaci was slashed to B+/Sta from
BB-/Neg by S&P driven by elevated leverage and poor debt servicing
ability amid slower property sales and delays in asset disposals.
¨
USD4.0bn
deals priced compared to USD5.7bn recorded in the previous week, mainly dominated by
issuances from the FI space i.e. EXIM India (Baa3/BBB-/NR) USD1.0bn 10y
bond, Kookmin Bank (A1/A/A)’s USD500m 3y bond and CDB Capital
(NR/AA-/A+)’s USD500m 5y bond, followed by the private placement deal for Adani
Transmission (Baa3/BBB-/BBB-) USD500m 10y bond sale at T+260bps and Glenmark
Pharmaceuticals’ (NR/BB/BB) USD200m 5nc3 deal.
SGD
CREDIT MARKETS
¨
July
primaries lowest YTD; Swiber headlines drove risk-aversion in HY O&G space. The issuance
space was largely quiet last week as July has registered the lowest monthly
issuance YTD at around SGD770m, being dominated by a SGD700m 5y issuance by the
Housing Development Board (Aaa/-/-). YTD issuances of SGD14.6bn are around 2.7%
lower if compared to a similar period last year. The surprise winding-up
announcement by Swiber (NR) on Thursday morning renewed concerns for the HY
O&G space and has driven selling pressure towards names such as VALZSP,
NCLSP and EZISP as UOB and DBS announced that both banks have exposures to
Swiber. Nevertheless, it reversed course on Friday night and announced that it
has gone for judicial management instead. Interest was also seen in IG and
banking papers like MRTSP, CAPITA and OCBCSP. Meanwhile, Sembcorp Marine’s (NR)
2Q16 net profit came in 91% lower at SGD10.7m, partly due to tightening margins
and forex losses on its British pound assets. Sabana REIT’s 2Q16 core net
income declined considerably by 33.6% to SGD7.3m due to negative rental
reversions and revised rental agreements that offloaded some expenses from the
lessee to Sabana while its aggregate leverage rose to 41.2% (from 39.6% in
1Q16).
¨
SOR
rises. There was a rise in the short-to-mid benchmark SOR, with the 2y rising
by 3.5bps to 1.48% while the 5y rose 4bps to 1.75%. Looking ahead, investors
will be eyeing the Singapore Jul PMI (2-Aug) for any signs of any improvement
in the industrial outlook (consensus: 49.5; June: 49.6).
MYR
CREDIT MARKETS
¨
Sarawak
Hidro (AAA) priced MYR5.54bn Sukuk, separated over 3y-15y at YTM of
4.06%-4.60% with proceeds mainly for refinancing purposes. YTD total issuance
increased to MYR54.2bn, which is about 60% of our estimation of MYR90bn for
2016, and 59% above the equivalent period in 2015. Secondary flows were thinner
last week with MYR2.19bn and MYR12.7bn changing hands in the corporate and
govvies market, as investors stayed on the sidelines amid the FOMC and BOJ
meeting. MYR strengthened 0.3% WoW to 4.07/USD last Friday and is trading
firmer at 4.03/USD this morning after the slower-than-expected US GDP growth of
1.2% for 2Q16. The MGS curve flattened over the week with MGS3y climbing 5bps
higher to 2.92% while MGS10y fell 5bps to 3.60%. Cagamas complex accounted for
c.15% of total corporate flows last week where tranche 10/16-7/24 settled at
3.135%-4.045% (-5 to +9bps). Followed by AA1-rated KLK 10/16-4/26 which fell
6-41bps to 3.103%-4.498%.
¨
Petronas,
Etiqa and Malaysia RE downgraded to A- by Fitch following change in
methodology; Moody’s placed MAHB on negative outlook. Fitch
downgraded several Malaysia issuers (Petronas, Etiqa, Malaysian RE) to A-
from A, following the downgrade of the sovereign rating local-currency issuer
default rating to A- last week after the rating agency revised its sovereign
rating criteria. Meanwhile, outlook for Malaysia Airports Holdings Bhd (MAHB)
was revised to A3/negative, from stable, due to the challenging operating
outlook of its wholly-owned subsidiary in Turkey, Sabiha Gokcen International
Airport (SGIA) following the coup attempt on 16-Jul and terrorist attacks in
early-2016.
No comments:
Post a Comment
Note: Only a member of this blog may post a comment.