TNB Priced USD750m Sukuk; Boubyan Bank on Positive Radar by Moody’s

17 October 2016

Global Sukuk Markets Weekly

TNB Priced USD750m Sukuk; Boubyan Bank on Positive Radar by Moody’s

Highlights & Performance

¨   Bloomberg Malaysia Sukuk Ex-MYR Total Return (BMSXMTR) and Dow Jones Sukuk Total Return (DJSUKTXR) index closed slightly lower at 105.3 (-0.13%) and 163.2 (-0.23%), with the index yield rising 2.7bps to 2.470% — led by AHB AT1 Pc6/19 (+38bps to 5.05%), DARALA (+20-34bps to 5.75-6.50%) and SHARSK (+16bps to 2.86%) ahead of the release of earnings results. September FOMC minutes showed a hawkish shift with several members noting an increase ‘relatively soon’.

¨   Malaysia’s August industrial production (IP) growth rose to 4.9% YoY from 4.1% in July — boosted by improved electricity (+11.4%) and manufacturing output (+4.6%). Prime Minister Najib will present Budget 2017 on 21 Oct (Friday) and our in-house economist expects the government to remain committed to lowering its budget deficit further to 3.0% of GDP. Malaysia’s CDS widened by 3.5bps to 121.4bps. Elsewhere, Turkish CDS widened by 2.4bps to 251.5bps as inflation remains above target and amid uncertain monetary backdrop towards its 20 Oct MPC meeting.

¨   The USD pipeline grew with Tenaga Nasional Bernad (A3/BBB+/NR)’s USD750m 10y sukuk 3.244% against IPT at 170bps area that was oversubscribed by 2.7x. Ahli Bank (A2/NR/A+) plans to meet investors for a perpetual NC5 AT1 sukuk. Moving to ratings, Moody’s upgraded Boubyan Bank’s outlook to positive premised on expectations that its progressive growth in domestic market share could strengthen its strategic and financial importance to its parent National Bank of Kuwait and to the domestic financial system, which increases the likelihood of parental support in case of need.

¨   In the MYR space, the MYR3.0bn 10y GII (reopening) received decent but lower BTC of 2.02x against 2.31x in Jun-16, with yield averaging at 3.813%. DanaInfra (GG) sets final guidance for MYR2.0bn 7-20y IMTN at 3.92-4.65% (MGS+43-50bps), while APM Automotive plans to establish MYR1.5bn ICP/IMTN programme for general corporate purposes and refinancing.