Ausgroup’s Bondholders Approved Restructuring; Preliminary Restitution Plan for Trikomsel

7 October 2016

Credit Markets Update

Ausgroup’s Bondholders Approved Restructuring; Preliminary Restitution Plan for Trikomsel

¨      APAC USD Credit Market: Asian bond markets stay quiet amid the golden week holiday. IG spreads and Asian CDS were relatively unchanged at 188.2bps and 116bps respectively, though non-IG yields tightened 2bps to 6.34%. USTs bear steepened, gained 2-4bps across the curve with the 10y rising 4bps higher to 1.74%, while 2y adding 2bps rose 0.85% as the weekly jobless claims fell to 249k or its lowest level since April-16 (consensus: 254k; prior: 256k). In the primary market, ITC Properties (NR) sets final guidance for USD200m 4.75% 5y bond at 5% against IPT at 5.125%, while UPL (Baa3/BBB-/BBB-), an Indian chemicals manufacturer, received USD1.1bn orders for USD500m 5y bonds priced at T+200bps compared to IPT at +220bps.

¨      SGD Credit Market: Ausgroup receives bondholders’ approval for restructuring. There was a decline in the short-to-mid curve by 1.6-1.7bps, with the 2y and 5y closing at 1.41% and 1.78% respectively. Yielder names like HYFSP and GALVSP appeared to garner interest while papers like BTHSP and OLAMSP traded wider. Meanwhile, Ausgroup (NR) has received approval from bondholders for the two year bond extension on its sole outstanding AUSGSP 10/16. Trikomsel (NR), which defaulted on its outstanding bonds totaling SGD215m in Oct-2015, announced a preliminary restitution plan which included delaying of repayments by up to 12 years and exchanging of debt for equity.

¨      MYR Credit Market: New 3.5y GII priced at 3.226%. The new MYR3.5bn Islamic 3y benchmark was well demanded with 2.06x BTC. Light trading session over the govvies market yesterday with the benchmark MGS moved sideways (-2bps to +1bp) where the 10y declined 1bp to 3.56%. The MYR depreciated to 4.144/USD before US published its NFP number. Robust flows of MYR801m in the corporate market. Khazanah was the top traded on combined MYR175m volume, with Khazanah ’21 rising 1bp to 3.78%, while Khazanah ’22 realigned 33bps lower to 3.90% from its previous trade on Mar-15.