APAC USD Credit Market: Asian Credits mixed as China shuts for week-long holiday. IG spreads were firmer (-3bps) at 190.5bps although Asian CDS and non-IG bond yields crept up 1-2bps to 118.1bps and 6.36% respectively. US Treasuries fell overnight, following the better-

4 October 2016

Credit Markets Update

Perisai Petroleum The Next O&G Casualty

¨      APAC USD Credit Market: Asian Credits mixed as China shuts for week-long holiday. IG spreads were firmer (-3bps) at 190.5bps although Asian CDS and non-IG bond yields crept up 1-2bps to 118.1bps and 6.36% respectively. US Treasuries fell overnight, following the better-than-expected Sep ISM manufacturing print which improved to 51.5 (consensus: 50.4; prior: 49.4). UST2y and 10y rose 3bps each to settle at 0.79% and 1.62%.

¨      SGD Credit Market: Perisai Petroleum technically defaults on SGD125m bond; Singapore’s 3Q16 property prices fell 1.5% QoQ. There was a rise in the short-to-mid SOR curve, with the 2y and 5y increasing by 1.3-2.5bps to close at 1.41% and 1.74% respectively. Banking papers such as ANZ, WSTP and ABNANV 25’s traded between 5-10bps tighter (according to Bloomberg). Meanwhile, Perisai Petroleum, a Malaysian O&G services company, technically defaulted on its sole outstanding SGD125m PPTMK 10/16 after bondholders rejected its restructuring proposal. Ezra Holdings (NR) has a 22.5% stake in Perisai. Singapore’s 3Q16 private residential prices fell 1.5% QoQ, or 10.8% cumulatively since peaks in 4Q13.

¨      MYR Credit Market: MGS curve move downward on quiet trading week. The 3y, 7y and 10y MGS declined 2bps WoW last week to 2.84%, 3.23% and 3.55% on a rather thin liquidity week with focus mainly on array of Fedspeaks, International Energy Forum and more importantly the OPEC informal meeting in Algeria. The Brent prices breached USD50/bbl yesterday following optimistic development from the oil cartel whom reached a preliminary agreement to cut oil productions. The MYR was seen trading firmer this morning at 4.1250/USD, from 4.1357/USD closing last week, amid the higher oil prices. Corporate market was active last week on average daily trading volume exceeded MYR1bn. About a third of the activities were concentrated in GG names such as Khazanah, Prasarana and DanaInfra. Followed by AA3 bonds such as LDF3, Kesturi and MEX II.