Brent Rallied on Russia-Saudi Chatter; Julius Baer In SGD Pipeline

11 October 2016

Credit Markets Update

Brent Rallied on Russia-Saudi Chatter; Julius Baer In SGD Pipeline

¨      APAC USD Credit Market: Asian bond markets stayed mixed. IG credit spreads tightened 1.3bps to 186.9bps, whereas average HY bond yields widened 2bps to 6.37%. Asia CDS spreads dipped approximately 6bps to 109.9bps lead by CDS spread tightening of CNOOC Ltd (-3bps) and Korea Electric Power (-4bps). Moving to the US, treasury markets were shut for Columbus Day holiday, though the USD rallied with the dollar index rising 0.297 to 96.929 following the second US presidential debate. Seperately, Brent oil jumped 2.3% overnight to USD53.1/bbl or its highest level this year on prospects of the oil supply deal amid bullish comments from Russian President Vladimir Putin and Saudi Arabia’s energy minister.

¨      SGD Credit Market: Julius Baer seeking to print SGD AT1. The short-to-mid benchmark SOR was mostly unchanged, with the 2y rising by 0.3bps to 1.43% while the 5y dipped 0.6bps to 1.79%. Names such as CENSP, ASPSP and FIRTSP closed tighter, though overall flows appeared quieter. Marco Polo Marine (NR) announced that it has received approval in-principle for the entry of a second ranking mortgage over land which will be pledged to bondholders as part of its bond restructuring program for its SGD50m MPMSP 10/17. Meanwhile, Julius Baer Group (A3/NR/NR) is meeting investors for a planned SGD AT1 print.

¨      MYR Credit Market: Foreign holdings in MGS dropped for the first time this year. Offshore players reduced their holdings in MGS by MYR1.2bn in Sep to MYR185.7bn or 52.6% of total MGS outstanding, after the huge maturity of MYR12.7bn during the month. Quiet trading day with merely MYR1.4bn exchanging hands in both the govvies and corporate bond markets. Govvies ended mixed where the 3y MGS rose 2bps to 2.90%, 10y MGS fell 1bp 3.57%, while MYR settled flat at 4.15/USD level. Over to the corporate market, TCMH 11/19 on MYR60m seen trading at 5.125%, 63bps below the previous trading level. Elsewhere, ANIH 11/26 unchanged at 4.48% on MYR50m trades, and Krung Thai B3T2 7/25c20 increased 2bps to 4.80%.