Markets Sidelined; AMMB Priced Dual Tranche MYR980m bonds

14 March 2017

Credit Markets Update

                                               

Markets Sidelined; AMMB Priced Dual Tranche MYR980m bonds

MYR Credit Market:

¨      Yields for Quasi-government bonds realigned higher. Notably, Jambatan Kedua 7/31 spiked 37bps to 4.77% on MYR60m trades, PTPTN 7/41 rose 9bps to 5.02%, while Prasarana 2/31 increased 39bps to 4.78%. Other top traded also ended lower such as Danga 2/26 (+8bps to 4.515%), PLUS 1/28 (+3bps to 4.59%) and Genting Cap (+1bp to 4.94%).

¨      AMMB priced dual tranche MYR980m bonds via AMMB Holdings (MYR740m 10nc5 T2 at 5.20% coupon) and Ambank Islamic (MYR240m 10y T2 at similar coupon).

¨      Quiet market tone ahead of FOMC meeting and Dutch election. Investors stayed on the sidelines as the MGS curve flattened with the 3y rising 3bps to 3.52% whereas the 10y fell 1bp to 4.14%. The MYR strengthened 0.15% to 4.447/USD despite weaker Brent oil prices. Oil price maintained on a declining trend to USD51.35/bbl yesterday on the back of higher expectation of US’ inventory data amid rising production level, offsetting the impact from OPEC’s production cuts.

APAC USD Credit Market:

¨      Treasury yields surge to 2017 high, extending its rise on the back of the strong US NFP print last Friday with the Fed widely expected to raise rates at its March FOMC meeting this week. 10y UST yields climbed 5bps to c.2.62% while the 2y note added 2bps to 1.37%.

¨      Asia bond markets recouped some of last week’s losses. IG spreads and average speculative bond yields tightened approximately 1-3bps to 172.1bps and 6.62% respectively. Meanwhile, Asian IG CDS compressed 2.1bps to 94.5bps, among the biggest constituent movements were PETMK, Samsung Electronics and Swire Pacific.

¨      The primary market was quiet ahead of this week’s key event risks. CIMB Bank Berhad (A3/NR/NR) plans to tap another USD100m on top of the existing USD500m 3y floating note that the company issued last week, selling at 3mL + 80bp. In the pipeline, Trafigura Group Pte Ltd (NR), a Dutch-based commodities trading company, may price USD Pnc5 bond, IPT is at 7% area.

¨      Over to rating action, Moody’s affirmed Sri Rejeki Isman Tbk P.T.’s (Sritex) B1 corporate family rating, the outlook is positive. This action is to reflect the company’s robust revenue growth and completion of its capacity expansion project places the company at a good position for further growth. However, its debt/EBITDA is likely to rise to over 4.0x at end-Dec 2016 from 3.8x on end-Dec 2015.

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