Intime Ratings’ Boosted by Alibaba Deal; Reopening 15y MGS

11 January 2017

Credit Markets Update

Intime Ratings’ Boosted by Alibaba Deal; Reopening 15y MGS   

¨      APAC USD Credit Market: Steady Asian bond markets; the IG and HY market were both firm at 181bps and 6.65% respectively. The iTraxx AxJ IG was equally stable at c.115.8bps with tighter Korean corporate CDS spreads (SK Telecom, Samsung Electronics and Hyundai Motor). UST yields ended mixed; marginally higher on the back of weaker oil prices and US equities whereas US treasury 3y auction drew strong demand. UST 2y settled at 1.19% while the 10y closed at 2.38%. Turning to ratings, S&P places Intime Retail Group on positive credit watch to reflect potential group support from its controlling shareholder Alibaba Group Holding Ltd following the proposed privatization of departmental store operator. In the primaries, India’s Bharat Petroleum (Baa3/NR/BBB-) received USD1.7bn orders for USD600m 10y bonds sold at T+200bps compared to IPT at +220bps area, whereas New World Development (NR) priced USD600m 10y bonds at 4.75% 50bps inside of IPT, achieving BTC of 4.5x. Franshion Brilliant Ltd (issue rating: Ba2/NR/NR) sets the price for USD500m 5.75% subordinated Pnc5 at IPT at 5.95% area.

¨      SGD Credit Market: Pacific Radiance wins contracts worth USD68m. There was a bull flattening in the short-to-mid SOR curve, with the 5y falling by 5bps to 2.18% while the 2y dipped 3.3bps to 1.61%. HDBSP names across the curve close tighter, and were led by mid-to-long HDBSP papers while yields of REITs like LMRTSP and FIRTSP also ended firmer. Pacific Radiance (NR) announced that it had won offshore support vessel charter contracts in the Middle East worth USD68m.

¨      MYR Credit Market: Reopening 15y MGS. The MGS saw an uptick in trading activity while the MYR remained unchanged (-0.05%) at 4.475/USD yesterday. The MGS yield curve continued to see a steepening as the 3y MGS rallied (-3bps) to 3.35% while the 10y MGS fell (+4bps) to 4.26%. The reopening of the first long-dated MGS of the year has opened and will close on 12-Jan. In the corporate space, MARC reaffirmed the ratings on Northport’s ICP and IMTN papers. Active secondary corporate market with MYR509m exchanging hands, led by short dated (09/17-07/19) Cagamas papers, Putrajaya 4/22-4/24 (+4bps to -14.8bps), MACB 08/20 and 11/22 (-4.2bps to -10.2bps) and Danga 02/26 (-3.9bps).