Source bonds in 2017 are LB183B, LB191A, LB193A, and LB196A with outstanding amount of Bt94.67 billion, Bt66.88 billion, Bt69 billion, and Bt301.99 billion, respectively. Destination bonds will be announced on Jun 19. Submission (holders of source bonds will send form/letter to the exchange for destination bonds) will take place on Jun 21 and price range of source and destination bonds will be released on Ju

Market Roundup

• US Treasuries recorded further gains on Tuesday despite lack of market-moving macro data releases. However, we think there was some safe haven flows with ECB meeting, UK election and Comey testimony on the radar. UST also saw a boost after reports indicated China was mulling buying up more UST (if UST levels are attractive). However, a late rally in equities and higher crude oil price amid the Qatar crisis limited UST gains by the close. Yields fell 3-4bps along medium to longer tenor benchmark papers.
• MYR remained below 4.2700 but gains were limited seeing recent rallies as well as recent dip in oil price. However, with some uplift in global crude oil price on the back of Middle East turmoil related to Qatar, some support for MYR should come in today. Expect range 4.2600-4.2700.
• Malaysia: Bonds continued to see mixed trading while there was also the 20-year MGS auction held on Tuesday. USD/MYR was initially trading below 4.2600, before eventually moved higher and settled at 4.2670 on Tuesday. We anticipate another quiet week pending the ECB meeting, UK election outcome, and Comey testimony in the US.
• The central bank conducted reopening auction for the 20-year MGS (MGS Apr’37). Bid-to-cover for the RM2.5 billion issue was just 1.704 times (versus average of 2.394 times at the 14 government auctions held earlier this year). Demand was lacking despite the attractive spread against the bellies of the curve. We think the recent lack of trading interest along the secondary segment for longer tenor MGS papers especially ahead of market sensitive events caused apprehension amongst players at this week’s auction. The auction average yield was 4.558% (within narrow spread of 4.54-4.576% and WI 4.56/53%) and was well within the market’s pre-existing secondary pricing.
• Thailand: Thai bonds extended gain along despite announcement of a debt switching which is expected to increase supply in the mid- and long-end around the end of this month. External environment bolstered demand for safer bond and EM bond rose ahead of external event risks.
• On Jun 6 Thai PDMO held a roadshow for a switching program totalling Bt90 billion and announced the source bonds. Unlike previous three switching programs in 2014-2016 using so called "one-to-multiple" or one source bond exchanging to multiple destination bonds, this year's program will assume the ‘rainbow’ or multiple-to-multiple method, or using multiple source bonds for multiple destination bonds.
• Source bonds in 2017 are LB183B, LB191A, LB193A, and LB196A with outstanding amount of Bt94.67 billion, Bt66.88 billion, Bt69 billion, and Bt301.99 billion, respectively. Destination bonds will be announced on Jun 19.  Submission (holders of source bonds will send form/letter to the exchange for destination bonds) will take place on Jun 21 and price range of source and destination bonds will be released on Jun 22 followed by submission period of exchange order form on Jun 23, allotment date on Jun 26, and delivery date on Jun 28.
• Indonesia: Government bonds were little changed amid thin volume. The bond auction saw healthy demand, as the government was able to issue IDR14 trillion (IDR2 trillion higher than IDR12 trillion initial target issuance) at market yields, while incoming bids reached IDR33.6 trillion. After the auction results, the market entered into a better buying mode as some players tried to cover shorts in the secondary market.