FW: RHB FIC Credit Markets Weekly - 18/9/17

 

 

18 September 2017

 

 

Credit Markets Weekly

 

Focus on US FOMC; Balance Sheet Reduction Eyed

SUMMARY:

¨      MYR Credit Market: Primaries remained active over the week as new supply amounted to MYR5.4bn; the reopening of the 5y MGS 3/22 in focus. Prasarana Malaysia Berhad printed MYR4bn across 6 tranches from its MYR10bn sukuk murabahah programme; Boustead Holdings Berhad (NR) issued MYR500m sukuk from its MYR2bn sukuk murabahah programme, with maturity of 7y. Putrajaya Bina Sdn Berhad (AAA - MARC) printed MYR600m sukuks across 4 tranches with maturities from 5y, 7y, 9y and 10y from its MYR1.58bn IMTN sukuk wakalah programme; Corporate flows more than doubled to MYR4.8bn.

¨       Corporate News – ARA Bintang's MYR330m second senior MTN was affirmed by RAM Ratings at AAA though the outlook has been revised to negative. MYR730m Third Junior MTN, MYR10m Fourth Junior MTN and MYR10m Fifth Junior MTN was affirmed by RAM at C3/Sta; MARC affirms the rating of Kimanis Power Sdn Bhd's (KPSB) MYR1.16bn sukuk programme at AA-_is with a stable outlook; RAM ratings assigned final ratings of AAA/Sta to IGB REIT Capital Sdn Bhd's MYR1.2bn First Tranche MTN.

¨      APAC USD Credit Market: Asian credit markets divergence exposed by UST rally. The IG credit spreads saw a strong rally of -7bps WoW to 169.3bp outperforming the HY where the average HY yields rose +3bps WoW to 6.56%, as the UST curve saw a strong rally across the curve over the week. Asian credit protection cost continued to fall to 73.5bps (-5bps) as concerns of N Korea in the previous week seemingly largely priced out. Primaries saw a strong showing especially in the financial names; USD11.83bn deals printed.

¨       Rating Actions – Fitch upgrades KT Corp to A/Sta from A-/Sta; S&P revised upwards Wesfarmers outlook to A-/Sta from A-/Neg; Fitch revised upwards Changchun Urban Development & Investment Holdings Group Co Ltd (CCDG) outlook to BBB/Pos from A-/Neg. S&P expressed it is not considering a change to S Korea's sovereign rating; Fitch views that India banking sector will remain negative in the future. S&P assigned B/Sta to Yihua Enterprise.

 

Table 1: Index Weekly Movements

Indices	15-Sep	8-Sep	Weekly Chg (bps)
iTraxx AxJ 5y IG	73.5	78.7	-5
AxJ IG Spread (bps)	169.3	176.2	-7
AxJ HY (%)	6.56	6.53	3
SOR 2y (%)	1.31	1.21	10
SOR 5y (%)	1.74	1.61	14
Malaysia 5y CDS	65.9	70.5	-5
MGS 3y (%)	3.32	3.30	2
MGS 5y (%)	3.49	3.47	2
MGS 7y (%)	3.78	3.76	2
MGS 10y (%)	3.85	3.83	3
AAA 5y Spread* (bps)	75	78	-3
AAA 10y Spread* (bps)	75	80	-5
AA 5y Spread* (bps)	110	115	-5
AA 10y Spread* (bps)	112	116	-4

Source: Bloomberg, BNM, RHBFIC        *MYR-denominated bonds

 

 

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