SGSPAA Upgraded to A-; Market Anticipates BoJ and Fed

20 September 2016

Credit Markets Update

SGSPAA Upgraded to A-; Market Anticipates BoJ and Fed

¨      APAC USD Credit Market: Asian credits stay firm. The iTraxx AxJ IG and IG credit spreads tightened approximately 2bps to 111.5bps and 188.8bps respective, while speculative bond yields traded unchanged at 6.41%. UST curve flattened slightly, as benchmark yields were 1-3bps higher with the 2y at 0.78% (+2bps) and 10y at 1.71% (+2bps). APAC primary markets slows as market participants set their sights on the two key central bank meetings this Wednesday. Moving to rating action, S&P upgraded SGSP Australia Assets Pty Ltd (SGSPAA) and its subsidiary Jemena Ltd’s rating A- from BBB+ as it views SGSPAA as a strategic subsidiary of State Grid International Development, providing it with a 1-notch rating uplift.

¨      SGD Credit Market: Cambridge Industrial refinances and lengthens debt maturity. There was a flattening in the short-to-mid SOR benchmark, with the 5y falling by 1bp to 1.77% while the 2y rose 0.7bps to 1.46%. Investor sentiment appeared tilted towards yielder names like GALVSP, EZISP and OLAMSP. Dyna-Mac Holdings (NR) announced that it has lodged a police report against an ex-employee for misappropriation of around SGD1m of funds while Cambridge Industrial Trust (Baa3) successfully refinanced via a SGD100m unsecured loan facility, thus lengthening its weighted average debt to maturity to 3.4y (from 3.1y previously).

¨      MYR Credit Market: Corporate market was active with MYR896m exchanging hands. Top traded was PLUS ’23-27 on combined MYR160m trades, ended the day at 4.05-4.21 (-2bps to +4bps), followed by Prasarana ’21-’27 fell 6-18bps to 3.76-4.20%. The MGS curve steepened across the 3y-7y on quiet trading session before the FOMC and BOJ meeting this week. At the end of the day, the 3y MGS fell 5bps to 2.91%, 5y unchanged at 3.27%, 7y rose 2bps to 3.48% while MYR range bound around the 4.13-4.14/USD level.