Moody’s Upgrades Four Chinese Financial Leasing Companies

1 September 2016

Credit Markets Update

Moody’s Upgrades Four Chinese Financial Leasing Companies

¨      APAC USD Credit Market: Firm Asian bond markets as IG credit spreads and Asian CDS held steady at 182.3bps and 113bps though average HY bond yields tightened 1bps to 6.31%. Investors turned their attention to the slew of APAC USD issuances such as Far East Consortium (NR)’s USD300m 5y bond priced at 3.75% (IPT at 4% area), and UOB (Aa1/AA-/AA-)’s USD600m 10.5nc5.5y B3T2 bond at T+170bps against IPT at +200bps area. Along with other issuances from Road King Infrastructure (B1/BB-/NR)’s USD500m 5nc3 at 4.7% (IPT at 5% area), Chongqing Western (NR/NR/BBB)’s USD500m 5y bond deal priced at T+220bps (IPT at +250bps area) and DBS (issue rating: A3/NR/BBB)’s USD750m Pnc5 AT1 deal at 3.6% (IPT at 4% area) which was oversubscribed by 10.7x. Separately, USTs yields traded wider albeit in a narrow range (+1 to 2bps) amid robust ADP employment print and the sharp fall in oil prices (-2.7% to USD47.0/bbl). Lastly on ratings, Moody’s upgrades the ratings of 4 Chinese financial leasing companies (Refer to Table 3) to reflect their strategic importance to their respective parent banks.

¨      SGD Credit Market: ASL Marine announces USD25m rights issue. There was a flattening in the SOR curve, with the 2y rising by 1.5bps to 1.47% while the 5y dipped 0.5bps to 1.73%. Interest was observed in mid-to-long dated property names like CITSP and CAPLSP, as well as high grade names like SPSP and LTAZSP. ASL Marine (NR), which has a SGD100m ASLSP 3/17 due, announced that it is conducting a rights issue of USD25m while Otto Marine (NR) stated that it has won two contracts collectively worth USD15.5m.

¨      MYR Credit Market: Spectrum reallocation could cost mobile players around MYR2.7bn. MGS yields continued to move upward with the 10y inching 4bps higher to 3.59% as MYR depreciate to 4.05/USD level before US’ job numbers tomorrow. Corporate activity tilted towards toll roads bonds such as LDF, Jambatan Kedua and PLUS on quiet trading session of MYR368m. Meanwhile, the four domestic mobile players (Maxis, Celcom, Digi and U Mobile) reportedly could pay approximately MYR2.7bn in a one-off spectrum reallocation fee which would allow the players to use the spectrum for 15 years, from the current yearly renewal model. On top of the one-off fee, the telcos could also be charged with combined annual fees of MYR230m over the period of 15y. BGSM Management 6/24 was seen traded 15bps lower at 4.829%.