FW: RHB FIC Credit Markets Weekly - 13/11/17

 

 

 

13 November 2017

Credit Markets Weekly

BNM Maintains OPR Unchanged, Recent Upward MGS/GII Yields Suggest Renewed Expectations on OPR Normalisation in 2018

SUMMARY:

MYR Credit Market: BNM maintains OPR; policy tone suggests improving macro conditions with market players anticipating potential OPR normalisation in 2018; Benchmarks 5y-10y MGS saw yields widening across the curve between +4bps and +10bps to settle at 3.76%, 4.01% and 4.08% respectively. MYR meanwhile was the top performing EM Asian currency trading gained +1.07% higher against the greenback WoW to end at 4.1918/USD. Govvies trading volume remained below the 3-month weekly average of MYR12.5bn; In the credit trading space, trading activities moderated with volume generally lower.

Corporate News – RAM has assigned Edra Energy Sdn Bhd (EESB) a preliminary rating of AA3/Sta on the proposed Sukuk Wakalah of up to MYR5.28bn mainly for the development of the largest combined cycle gas turbine power plant in Malaysia. RAM opine the preliminary rating is contributed by stable cash-flow generation of EESB with minimum FSCR of 1.50x.

¨      APAC USD Credit Market: Markets pare back after uncertainty of tax reform dominates once more; Spreads widening saw HY underperform.

Rating Actions -  Moody's upgraded SK Hynix Inc to Baa3/Pos from Ba1/Pos; Fitch upgrades Emeco Holdings Ltd to B-/Sta from CCC/Sta; Moody's upgrades Evergrande Group's rating to B1/Sta from B2/Sta; Fitch upgrades China Baowu Steel Group Corp Ltd to A/Sta from A- ratings watch negative; Fitch Downgrades Parkson Retail Group's rating to CCC/Sta from B-/Sta; S&P downgrades PT Tunas Pratama Tbk to B+/Sta from BB-/Sta.

 

Table 1: Index Weekly Movements

Indices	03-Nov	27-Oct	Weekly Chg (bps)
iTraxx AxJ 5y IG	79.9	74.4	5
AxJ IG Spread (bps)	162.9	159.4	4
AxJ HY (%)	6.70	6.62	8
SOR 2y (%)	1.45	1.45	-1
SOR 5y (%)	1.87	1.89	-2
Malaysia 5y CDS	68.7	63.1	6
MGS 3y (%)	3.49	3.49	0
MGS 5y (%)	3.76	3.71	5
MGS 7y (%)	4.01	3.97	4
MGS 10y (%)	4.06	3.96	10
AAA 5y Spread* (bps)	54	62	-8
AAA 10y Spread* (bps)	59	67	-8
AA 5y Spread* (bps)	86	93	-7
AA 10y Spread* (bps)	95	101	-6

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

 

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