FW: RHB FIC Credit Markets Weekly - 21/5/18

 

 

 

21 May 2018

Credit Markets Weekly

Malaysia GDP 5.4%; 10y USTs Closed at 3.06%.

SUMMARY:

¨      MYR Credit Market: Global yields saw an upward spike led by the USTs, which saw a decline in EM Asia assets. Despite the rise in yields, the domestic bond market saw robust trading especially in the MGS/GII space. This was supported by the recent issuances of the 7y GII and occurred despite the weak primaries in the MYR for the week. Govvies weekly trading volume rose significantly to just under MYR20.1bn from MYR2.9bn the previous week. The same for the corporate bonds/sukuks secondary trades which increased to MYR1.0bn from MYR287m the week before. The 4Q 18 GDP was also reported at 5.4% YoY 1Q 18 (5.9% 4Q 18).

¨      Corporate News – RAM Ratings assigns the AAA/Sta rating on Mercedes-Benz Services Malaysia Sdn Bhd; MARC affirms Projek Lebuhraya Usahasama Berhad (PLUS) at AAAIS/Sta.

¨      APAC USD Credit Market: Following Friday’s meeting between China Vice Premier and the US representatives, both parties have agreed to put the trade war on hold and agreed to setup a framework for addressing the trade imbalances in the future. Treasuries ended the week with gains across the curve as investors pared losses from earlier week. However, WoW the UST yield curve bear flattened as the 5y, 10y and 30y USTs inched higher +4.99bps WoW, +8.64bps WoW and +9.33bps WoW to end the week at 2.89%, 3.06% and 3.20% respectively while the 2y UST closed at 2.55% (+1.18bps WoW). The USD as seen in DXY closed the week stronger at 93.64 (+1.19% WoW).

¨      Rating Actions – Rating Actions - Moody’s upgraded the rating of Alcoa of Australia Limited (AoA) to Baa2/Sta from Baa3/Sta; Moody’s revised Ascendas Real Estate Investment Trust’s (A-REIT) rating outlook to A3/Pos from A3/Sta; Moody’s moves down its outlook on Dr Peng Telecom & Media Group Co. Ltd. to Ba2/Neg from Ba2/Sta; Moody’s reviews Tianqi Lithium Corporation Baa3/Sta rating for downgrade; Moody’s assigns A1/Sta to Shinhan Financial Group Co., Ltd; Moody’s assigns A3/Sta to Shinhan Investment Corp; Moody’s assigns Reece Limited Ba1/Sta rating; Moody’s assigns Boral Industries Inc Baa2/Sta rating.

 

 

 

 

 

 

 

 

 

 

Table 1: Index Weekly Movements

Indices	18-May	11-May	Weekly Chg (bps)
iTraxx AxJ 5y IG	75.3	75.2	0
SOR 2y (%)	2.07	2.05	2
SOR 5y (%)	2.45	2.38	7
Malaysia 5y CDS	84.2	89.3	-5
MGS 3y (%)	3.75	3.66	9
MGS 5y (%)	3.89	3.79	10
MGS 7y (%)	4.05	3.92	14
MGS 10y (%)	4.17	4.16	1
AAA 5y Spread* (bps)	58	62	-4
AAA 10y Spread* (bps)	58	61	-4
AA 5y Spread* (bps)	86	92	-5
AA 10y Spread* (bps)	93	97	-4

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