S&P Maintains Malaysia’s Rating at A-/Sta; Asian Credits Firmer

8 November 2016

Credit Markets Update

S&P Maintains Malaysia’s Rating at A-/Sta; Asian Credits Firmer

¨      APAC USD Credit Market: Asian credits firmer after the US FBI cleared H. Clinton from any criminal wrongdoing which spurred a risk-on rally in global equities. Asian CDS narrowed to 116.7bps (-2bps), while IG spreads and average HY bond yields tightened 1-1.5bps to 194.8bps and 6.44% respectively. Similarly, UST yields pushed higher overnight by 3-6bps as UST10y yields gained 5bps to 1.83%and 2y rose 3bps to 0.82%, while the USD jumped ahead of the US election (DXY: +0.72 to 97.78). Turning to pipeline deals, Oil India Ltd (Baa2/NR/BBB-) plans USD800m 5y bonds with proceeds earmark for refinancing existing loans, while China Grand Automotive Services Co. Ltd (B1/NR/BB-), a Chinese automobile dealership and financing provider, plans investor meetings in Hong Kong and Singapore later today for a potential USD bond offering. Likewise, China Huarong Asset Management (issue rating: NR/BBB+/A) could potentially tap the market for USD bonds.

¨      SGD Credit Market: PT Ciputra Property receives consent for early redemption option. The short-to-mid SOR curve rose, with the 2y rising by 2.1bps to 1.33% while the 5y increased 3bps to 1.76%. Papers such as TATSON and EZISP appeared tighter. First REIT (NR) is acquiring Siloam Hospitals Labuan Bojo for SGD20m from Lippo Karawaci, who is also First REIT’s 27.5% majority shareholder. This transaction is to be funded via existing debt facilities and cash. PT Ciputra Property (NR) announced that it has received approval for the early redemption option of its SGD65m CTRPIJ 2/18 due to a planned merger between PT Ciputra Property and its majority shareholder PT Ciputra Development.

¨      MYR Credit Market: S&P affirmed Malaysia at A-/Sta; Foreign players returned to the govvies market in Oct. S&P retained Malaysia rating outlook at A-/Sta premised on the strong external position and considerable monetary policy flexibility. Total foreign holdings in MGS+GII increased MYR6.6bn to MYR214.8bn in Oct, after falling MYR5.6bn in the previous month. The foreign players added MYR3.2bn in the MGS to MYR184.6bn in end-Oct or 51.9% of the total MGS outstanding. Additional MYR3.4bn holdings were also seen in the GII to MYR30.3bn (12.6% of total GII outstanding). Govvies market was muted at below MYR1bn transactions yesterday as investors probably stayed on the sidelines before the US Presidential Election. Similarly, we saw merely MYR309m crossed in the corporate market. PASB was the most active on combined MYR80m trades with tranches ’23-’26 ending flattish at 3.97-4.16%. The MYR weakened 0.3% to 4.21/USD as the greenback gained after FBI cleared Clinton of any wrongdoing.