FW: RHB FIC Credit Markets Weekly - 5/2/18

 

 

 

 

5 February 2018

Credit Markets Weekly

Fed Maintained FFR; Focus on New Issuance 7.5Yr GII 08/25.

SUMMARY:

¨      MYR Credit Market: Trading plunges on a shortened week and Fed FOMC. The MGS curve bear steepened in the first half of the week, before the yield curve rallied on the last day of the week, following the resumption of trading and the results of the FOMC; On a shortened trading week, govvie trade volumes fell to MYR8.5bn; Secondary flows saw total corporate bonds/sukuks recorded lower at just under MYR687m.

¨      Corporate News - RAM Ratings downgraded Lafarge Cement Sdn Bhd (LCSB) to A1/Sta from AA2/Neg; MARC Rating has affirmed the AAA/Sta rating on both Premier Merchandise Sdn Bhd's programmes; MARC Rating affirmed Jimah East Power Sdn Bhd at AA-_IS/Sta;

¨      APAC USD Credit Market: US Treasuries posted steep decline which saw the 10y and 30y USTs breaching the 2.80% and 3.00% mark respectively. This was mostly driven by stronger job reports as well the anticipation of rate hikes in the coming months. Concentration for the week was on the last Janet Yellen's FOMC meeting as Fed Chair. Despite the muted action, where policymakers held FFR firm as widely expected, market participants remained rather confident for three (3) rate hikes for this year under the helm of new Fed Chair Jerome Powell.

¨      Rating Actions - S&P has upgraded Metallurgical Corp. of China (MCC Ltd.) from BBB/Sta to BBB+/Sta; Moody's upgrades Sydney Airport Finance Company Pty Ltd (SAFC) to Baa1/Sta from Baa2/Pos; Fitch has downgraded Global Cloud Xchange Limited (GCX) from B-/Sta to CCC/Sta; Fitch downgrades Noble Group Limited to C from CC; S&P has downgraded PT MNC Investama Tbk. from CCC/Sta to CCC-/Neg; Moody's has downgraded the ratings on Thai Beverage Public Company Limited (ThaiBev) to Baa3/Neg from Baa3 on a review to downgrade; Fitch has downgraded Global Logistic Properties Limited (GLP) from BBB+/Neg to BBB/Sta; S&P has revised upwards the outlook on West China Cement Ltd. (WCC) from B+/Sta to B+/Pos; S&P revised down the outlook on QBE Insurance Group Ltd. (QBE) from A-/Pos to A-/Sta; Fitch has placed a Rating Watch Negative on A- rated QBE Insurance Group Limited (QBE); S&P revised down the outlook on Qingdao City Construction Investments (Group) Ltd. (QCCI) and Hongkong International (Qingdao) Co. Ltd. (QCCI HK) to BBB/Neg and BBB-/Neg from BBB/Sta and BBB-/Sta respectively; Fitch has revised the outlook on Modern Land (China) Co. Ltd. from B+/Sta to B+/Neg; S&P has assigned China Minmetals Corp. with BBB+/Sta.Moody's has assigned Hubei Science and Technology Investment Group co. Ltd. (HSTIG) with a Baa2/Sta rating.

 

Table 1: Index Weekly Movements

Indices	02-Feb	26-Jan	Weekly Chg (bps)
iTraxx AxJ 5y IG	64.9	63.4	2
SOR 2y (%)	1.67	1.47	20
SOR 5y (%)	2.11	1.89	22
Malaysia 5y CDS	57.2	55.4	2
MGS 3y (%)	3.37	3.35	2
MGS 5y (%)	3.60	3.59	1
MGS 7y (%)	3.92	3.91	1
MGS 10y (%)	3.89	3.89	0
AAA 5y Spread* (bps)	74	73	1
AAA 10y Spread* (bps)	79	77	2
AA 5y Spread* (bps)	105	103	2
AA 10y Spread* (bps)	113	111	2

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

 

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