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Thursday, February 5, 2015
Malaysia Daily, Maybank KE (2015-02-05)
RAM Ratings reaffirms AA1/Stable rating of YTL Power International’s debt facility
Published on 04 February 2015
RAM Ratings has reaffirmed the AA1/Stable
rating of YTL Power International Berhad’s (YTLPI or the Group) MTN
Programme of up to RM5 billion (2011/2036). The rating continues to
reflect the Group’s stable business profile, underscored by its
diversified business base across various countries. The relatively
steady cashflow from the Group’s core utilities division, which is
underpinned by favourable long-term concession agreements, mitigates its
exposure to cyclical industries.
Meanwhile, the rating remains moderated by the
Group’s strained balance sheet and heavy debt burden. Notably, more than
half of its debt is parked under operating subsidiaries that are
self-sufficient, and these borrowings are concession-related,
ring-fenced and non-recourse to YTLPI. Given that the Group’s treasury
functions are centralised, we derive substantial comfort from its
ability to tap its subsidiaries for additional dividends.
During the review period, YTLPI’s geographical and
earnings diversity, with core long-term concession-based investments in
power, water and sewerage services in the UK, Singapore and Malaysia,
enabled the Group to maintain a strong operating and financial showing
despite some softening in the Singaporean power sector where competition
is rising. “YTLPI’s near- to medium-term earnings, nonetheless, remain
vulnerable to downside risks owing to additional generation capacity in
the Singapore electricity market as well as the imminent expiry of the
power purchase agreements of the Group’s 2 Malaysian power plants in
September 2015,” observes Davinder Kaur Gill, RAM’s Co-Head of
Infrastructure and Utilities Ratings.
To this end, the Group’s highly stable UK-based
Wessex Water Services Limited (Wessex) will continue to anchor its
earnings, despite the UK water regulator’s intention to open up the
market to competition. This move is envisaged to have minimal impact on
Wessex’s position, given its market-leading operational and regulatory
performance. “YTLPI’s sizeable cash coffers of RM8.96 billion as at
end-June 2014 further allow the Group to pursue opportunities to expand
its utilities business either locally or abroad” Gill adds.
CIMB Daily Fixed Income Commentary - 5 February 2015
Good Morning,
Market Roundup
- US Treasuries posted gains along the curve, following the retreat in oil prices from the recent highs, in conjunction with weaker-than-expected ADP Employment data. Brent crude oil headed lower from $57.91/bbl to $54.16/bbl on Wednesday, while ADP Employment showed a reading of 213k in January against 223k of consensus estimate.
- Malaysian government bonds strengthened further on the first day of trading in February. As downshift in the USD/MYR pair boosted interest along ringgit govvies, with levels hovering near 3.5591 late Wednesday against 3.6300 the day previous. Yields fell about 3-9 along the 5-7 year papers. Meantime, IRS rates came down 2-3bps.
- Thai government bonds closed weaker whilst the baht pared gains Wednesday. USD/THB was hovering near 32.63 versus a daily low of 32.55. The same day, the government sold Bt9.0 billion of long tenor LBA37DA. Demand as measured by the bid-to-cover ratio was decent at 1.65x. Next week, the government is due to sell Bt5.0 billion of 15-year inflation-linked bonds ILB283A.
- IDR government bonds were traded down following Tuesday's bond auction. Foreign names got into some selling action while local players also trimmed positions. Price drop-off was felt especially along the bellies to long end of the curve, with FR71 (15- year), being Tuesday's auctioned bond, accounted for 30% of market transactions, followed by on-the-run FR70 (10-year bonds) and FR68 (20-year). The market provided support bid at current yield until closing hours. Total volume was still big amounting IDR19.6 trillion.
- On Wednesday, Asian dollar credits were mostly traded firm. Sentiment was aided by lessened worries over in Europe. Hopes increased of resolution between the new Greece government and the EU. Earlier in January, there were fears that the new government would backtrack on austerity measures placing the debt aid from the EU to Greece at stake. New Finance Minister Yanis Varoufakis was heard saying the government would no longer call on creditors to write off part of Greece’s €315 billion debt and would propose debt swaps, thus maintaining Greece on the debt program.
Wednesday, February 4, 2015
Maybank GM Daily - 4 Feb 2015
FX
Global
US
equities closed higher overnight, with energy sector outperforming. Oil prices
continued its rally, +20% since 30 Jan. Commodity-linked currencies (CAD, AUD,
NZD) found support; USD was broadly weaker with DXY at 93.80 levels. EUR/USD
managed to squeeze higher above 1.15 levels overnight, as Greek fears
subsided after Greece’s proposal for restructured debt instead of the feared
debt write-off. VIX closed down 2.10 to 17.3 levels.
USD/MYR
opened lower this morning towards 3.5650 levels (from 3.6295 close 30 Jan),
tracking the rally in oil prices. Since 30 Jan, oil prices have rallied nearly
20%. We previously noted that 10% move in oil prices is associated with MYR
moving 1.5%. Stable oil prices could further support the ringgit. Next
big level 3.55 before 3.52 (50 DMA).
Day
ahead brings a host of Composite and Services PMI releases from EC, GE, FR, SP,
IT. For US, ADP employment change, services and composite PMI on tap.
Fed’s Mester is due to speak later. Despite popular trades such as short EUR,
short AUD getting squeezed higher, our core view of USD strength remains
unchanged, and we still favor fading this rally.
G7 Currencies
DXY – Buy dips. USD finally gave way and traded lower towards 93.80
levels on disappointing US factory orders amid risk-on sentiment. We have
mentioned for awhile that long USD trade is increasingly looking too
comfortable and very much one-way, and could be due for a short term pullback
towards 93-levels. A further extension of the pullback could see the DXY at
92.50-75 levels (before the break-out). We still favor buying USD on dips. Day
ahead ADP, ISM non-mfg data on tap. Fed’s Mester is due to speak later.
USD/JPY – Rangy With An Upside Bias. The USD/JPY had a choppy session yesterday, weighed by
the AUD/JPY dip after RBA’s cut. Pair is now settling around the 117.60-70
levels this morning, lifted by dollar weakness and equity gains. Intraday
momentum indicators are all showing a bias to the upside today. Ahead of US ADP
tonight, expect the pair to trade range-bound within 116.80-118.00 still with
an upside tilt today. Any surprises could see the pair trade in a wider range
within 115.50-119.00. Watch for Kuroda’s Q&A in parliament later this morning.
AUD/USD – Bearish bias. AUD/USD tanked to fresh multi-year lows of
0.7626 as RBA surprised markets with a 25bps rate cut yesterday, on growth and
labor market concerns and soft commodity prices. But the move lower was
short-lived as AUD losses was reversed into NY close, as risk sentiment
improved. Pair currently trades 0.7785 levels. Still favor playing from the
short end, but look for better levels towards 0.7860s. Tech supports the view
with 4-hourly MACD and stochs suggest some near term upside. No data due for
release today. AUD/NZD likely to remain pressured on widening interest rate
differential. Yesterday we called for AUD/NZD to break 1.06, enroute to 1.04.
EUR/USD – Fade Relief Rally. EUR/USD rallied hard towards 1.1530s
as Greek fears subsided after Greece’s proposal for restructured debt instead
of the feared debt write-off. Deflation risk in Euro-area remains with EC PPI
and IT CPI down. Fade rallies remain the name of the game; daily MACD and stoch
are still bullish bias; suggesting further upside. We look for better levels
towards 1.15 to enter shorts.
EUR/SGD – Range. EUR/SGD remained supported, trading higher towards 1.5510 levels
overnight on EUR strength. Pair is likely to remain supported intra-day, 1.5490
sees 38.2% Fibonacci retracement level of 1.6389 – 1.4936. Expect 1.54 – 1.5550
range intra-day.
Regional
FX
The SGD NEER trades around 1.37% below the implied mid-point of 1.3275.
We estimate the top end at 1.3006 and the floor at 1.3545.
USD/SGD – Bearish. The USD/SGD broke below the 1.35-levels overnight and is testing our
support at 1.3460, helped by improved risk sentiments over Greece. Pair is
hovering around 1.3460, though this could be temporary given the dollar’s
resurgence currently. Upticks today should meet resistance around 1.3555.
Still, a firm break below the 1.3460 support level could see the pair head
towards next support at 1.3420. Intraday momentum indicators are all showing a
bias to the downside ahead.
AUD/SGD – Potential Short-Term Bounce. The AUD/SGD hit a low not seen since 2009 at 1.0324
yesterday on the back of RBA’s rate cut before rebounding to hover around
1.0490 at last sight. Intraday MACD is showing little momentum in either
direction ahead, suggesting range-bound trades seem likely. After yesterday’s
swing, cross is likely to consolidate today around current levels. Expect
1.0324-1.0620 range to hold today.
SGD/MYR – Consolidation Lower.
The SGD/MYR plunge this morning to the 2.65-region following the resurgence in
the MYR on the back of a recovery in oil prices and improve risk sentiments.
After the massive downward move today, expect the cross to consolidate within
2.6340-2.6850 today. Intraday momentum indicators are showing a bias to the
downside ahead.
USD/MYR – Downside Bias. Spot USD/MYR smashed down
to 3.5670 as local markets returned after a 2-day break. 1s NDF lower to
3.5770. Big move came off the back of improvement in oil prices (+20% since
end-Jan). We had previous noted that a 20% move in oil prices see a ~3% move in
MYR. Stable oil prices could further support the ringgit. Next big level 3.55
before 3.52 (50 DMA). Intra-day 3.55 – 3.5750 range expected. Daily; Hourly momentum
are biased for mild downside.
USD/CNY was fixed at 6.1318
(-0.0051) vs. Previous 6.1369 (+2.0% upper band limit: 6.2569; -2.0% lower band
limit: 6.0116). CNY/MYR was fixed at 0.5716 (-0.0131). USD/CNH –
Downside bias. USD/CNH eased towards 6.2540 levels, on lower USD/CNY
setting, weaker USD. 6.2450 – 6.2720 intra-day range likely, with mild bias to
downside on broad USD weakness. Slow stochastics are also sho falling from
overbought areas. Daily MACD and stoch are bias for downside, short term.
USD/IDR – Bearish Tilt. The USD/IDR is on the slide this morning, dragged
lower by improved risk sentiments over Greece as well as Jokowi’s pledge to
proceed with reforming the economy and settle the dispute between the policy
and the anti-corruption agency. Pair has lost most of its bullish sentiments
and slow stochastic is showing tentative signs of dipping, suggesting the
potential for a retreat ahead. Downside today should be limited by 12480, while
any rebound should be capped by 12700. Yesterday, foreign funds bought a net
USD26.46mn in equities, and removed a net IDR1.1tn from their outstanding
holdings of debt on Mon. The 1-month NDF continues on its slide since hitting
the year’s high so far at 12878 (7 Jan) and is currently hovering around 12657
with intraday MACD and slow stochastics showing a downside bias. The JISDOR was
fixed lower at 12643 on Tue from Mon’s 12700 and should again be fixed lower
should the spot’s drift lower hold.
USD/PHP – Gapped
Lower. The USD/PHP gapped slightly lower to 44.035 at the opening from
yesterday’s close of 44.048, helped by the improvement in global risk
sentiments and continued equity inflows. So far, the 44-figure has been key
support for the pair and for bears to extend control, a firm break of this
level is needed. Next support is seen around 43.810. Resistance remains at
44.280. Intraday MACD is showing little momentum in either direction though
slow stochastic is showing tentative signs of a downturn. Equity flows
continue to be supportive of the PHP with a net USD167.42mn flowing into the
PSEi yesterday. The 1-month NDF is on the uptick this morning, sighted around
44.05 with slow stochastics on the dip.
USD/THB – Range-Bound. The USD/THB tested both our support/resistance
levels at 32.500 and 32.650 but failed to make headways in either direction.
Pair has settled back near the middle of its current trading range of
32.500-32.650, helped by dollar weakness overnight. Both the intraday MACD and
slow stochastic have flatlined suggesting range-bound trades are likely ahead.
Look for the pair stay range-bound within 32.500-32.650 today. Equity flows
yesterday of a net THB2.27bn helped support the THB, though this was slightly
mitigated by the outflow of a net THB0.32bn in debt.
Rates
Indonesia
Indonesia Bond prices incline on the opening of the day as well as post
auction. Positive sentiment from Monday economic data release remains
supporting the rally of bond prices. Aside from that, there were minimum
sentiments. There were mixed participant in the market yesterday with both
local and offshore banks on the offer side. 5-yr, 10-yr, 15-yr and 20-yr
benchmark series yield stood at 6.724%, 6.845%, 7.003% and 7.141% while 2y
yield shifts down to 6.592%. Heavy volume at secondary market remains to be
traded at government segments amounting Rp25,336 bn with FR0069 (5y benchmark
series) as the most tradable bond. FR0069 total trading volume amounting
Rp10,008 bn with 126x transaction frequency and closed at 104.133 yielding
6.724%.
Indonesian government conducted their weekly auctions and received
incoming bids of Rp40.23 tn bids versus its target issuance of Rp12.00 tn or
oversubscribed by 3.4x. Despite Incoming bids were lower by 26.6% compared to
20 Jan conventional auction, hence in our view, incoming bids remains heavy.
However, DMO only awarded Rp16.00 tn bids for its 3mo which was sold at a
weighted average yield of 5.64200%, 1y SPN at 6.20538%, 5y FR0069 at 6.70931%
while 15y FR0071 was sold at 6.96176%. Incoming bids were mostly clustered at
the long end tenor specifically FR0071 (15y benchmark series). Bid-to-cover
ratio during the auction came in at 1.23X – 6.82X. No bids were rejected during
the auction. WAY awarded during the auction was lower compared to yesterday
closing yields. Incoming bids by foreigner during the auction was seen approx.
Rp14.83 tn or 36.87% of total incoming bids with awarded bids worth of Rp8.44
tn. Hence, we might need to wait for some while to get the real sense on how
much did foreigner purchased during the auction through local main dealers.
What was different between yesterday’s auction compared to last conventional
auction was the jump of WAY which were not as larger and wide as last auction.
FR0069 and FR0071 WAY came in within our indicative WAY range. Till the date of
this report, Indonesian government has raised approx. Rp54.37 tn worth of debt
through bond auction in 1Q 15 which represents 69.3% of the 1Q 15 target of
Rp78.50 tn.
Corporate bond trading traded heavy amounting Rp1,226 bn. BBTN15 (Bank
BTN XV Year 2011; Rating: idAA) was the top actively traded corporate bond with
total trading volume amounted Rp490 bn yielding 9.373%.
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