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Thursday, March 1, 2018
FW: [Maybank IB] Today's Research - Malaysia
FW: 20180301 AmBank FX Daily Outlook
Highlights of today’s AmBank FX Daily Outlook as follows:- |
v Powell - the new dollar catalyst, Pound plunged on Brexit uncertainty v MYR to fluctuate in the range of 3.9114 – 3.9283 against US dollar v Key Watch: (i) US Fed Powell Testimony; (ii) Jan US Personal Income; (iii) Jan US Personal Spending; (iv) Feb US/UK/Germany/EU/Malaysia Markit Manufacturing PMI; (v) Jan EU Unemployment Rate |
Best regards,
FX Research & Strategy
AmBank Research, AmBank (M) Berhad
+603 2036 2255 (DL) +03 2031 7218 (Fax)
Level 15, Bangunan AmBank Group, 55 Jalan Raja Chulan, 50200 Kuala Lumpur
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FW: MARC AFFIRMS TENAGA NASIONAL'S CORPORATE CREDIT RATING AND SUKUK RATING AT AAA AND AAAIS RESPECTIVELY
P R E S S A N N O U N C E M E N T
IMMEDIATE RELEASE
MARC has affirmed Tenaga Nasional Berhad’s (TNB) corporate credit rating of AAA and sukuk rating of AAAIS on its outstanding RM2.0 billion Al-Bai’ Bithaman Ajil Bonds. The ratings outlook is stable. The ratings incorporate a two-notch uplift from TNB’s standalone corporate credit rating of AA/Stable to reflect MARC’s assessment of a high likelihood of government support premised on the company’s critical role as the country’s principal energy provider. The support assessment also considers the government’s indirect majority ownership in TNB which provides considerable leeway to influence the utility company’s strategic direction.
TNB’s credit strength reflects its monopoly on electricity transmission and distribution in Peninsular Malaysia and Sabah, its significant electricity generation capacity and strong operational track record with a generation capacity of 56.2% total installed capacity in Peninsular Malaysia of 22,911-megawatt (MW) in the financial year ended August 31, 2017 (FY2017). TNB’s plant operational efficiency has shown further improvement as demonstrated by the equivalent availability factor of 89.5% (FY2016: 89.3%) and equivalent unplanned outage rate of 1.9% (FY2016: 3.7%). TNB’s system average interruption duration index (SAIDI) increased marginally to 50.24 minutes (FY2016: 49.71 minutes) while transmission & distribution losses stood at 7.5% (FY2016: 7.4%), indicating that TNB’s distribution system reliability may have reached its optimal level.
Electricity demand growth is lower than forecast in 2017 with Peninsular Malaysia growing by 1.0% y-o-y and Sabah by 0.2% y-o-y. Despite lower electricity demand growth, TNB reported revenue increase of 6.5% y-o-y due to lower over-recovery from the Imbalance Cost Pass Through (ICPT) mechanism amounting to RM0.2 billion as well as higher unbilled revenue of RM0.4 billion in FY2017. Profit after tax declined by 5.6% due to higher finance cost as TNB undertook additional borrowings in addition to incurring higher tax expenses. Operating cost increased y-o-y to RM39.1 billion from RM36.2 billion in line with higher average coal prices as well as coal consumption. To counter stagnant demand in the domestic market, TNB has been expanding internationally as part of its five-year expansion plan. In FY2017, the group acquired a 50% stake in a 365MW solar photovoltaic portfolio in the United Kingdom and won a US$176 million operations & maintenance contract in Pakistan.
In FY2017, net cash flow from operations (CFO) declined to RM12.6 billion compared to RM13.3 billion in FY2016 backed by higher receivables and lower payables. This led to a lower CFO interest coverage ratio of 10.78 times. Negative free cash flow widened to RM2.9 billion mainly due to increased capex and higher dividend distribution. TNB’s new dividend policy is based on 30%-60% of consolidated net profit attributable to shareholders after minority interest, excluding extraordinary non-recurring items at 61 sen per ordinary share (FY2016: 32 sen per ordinary share). Additionally, TNB’s total borrowings also increased by 9.7% y-o-y to RM44.2 billion in FY2017 from RM40.3 billion. This is mainly due to a RM2.0 billion sukuk issuance as well as US$750.0 million multi-currency medium-term notes to finance capex, investments, working capital requirements for TNB power plant projects and more. MARC would also like to highlight that TNB’s contingent liabilities, which include liquidity support provided to its subsidiaries in the form of completion support and rolling guarantees on power plant projects, remain a potential concern.
Furthermore, TNB’s capex increased by 5.9% to RM12.1 billion in FY2017 compared to RM11.4 billion in FY2016. Capex was mainly concentrated on new generation capacity projects at 45.1% while the remaining bulk of capex comprised recurring generation (4.6%), transmission (17.7%), distribution (25.2%) and others at 7.3%. Projects in the pipeline include the Southern Power Generation, Jimah East Power and TNB Sepang Solar power plants which are expected to be completed between 2018 and 2020.
The stable outlook reflects MARC’s expectations that government support will be sustained in the next 12 to 18 months in view of TNB’s strategic importance to the nation’s energy distribution. Any weakening in TNB’s debt protection measures and/or liquidity buffer would exert pressure on its standalone rating.
Contact: David Lee, +603-2717 2955/ david@marc.com.my
February 28, 2018
[This announcement is available in MARC's corporate homepage at http://www.marc.com.my]
---- DISCLAIMER ----
This communication is provided by Malaysian Rating Corporation Berhad (MARC) on the basis of information believed by MARC to be accurate and reliable as derived from publicly available sources or provided by the rated entity or its agents. MARC, however, has not independently verified such information and makes no representation as to the accuracy or completeness of such information. Any assignment of a credit rating by MARC is solely to be construed as a statement of its opinion and not a statement of fact. A credit rating is not a recommendation to buy, sell, or hold any security.
© 2018 Malaysian Rating Corporation Berhad
IMPORTANT NOTICE:
The information contained in this email and/or any attachment hereto is strictly confidential and privileged. If you are not the intended recipient, and/or have received this email in error, you must not copy, disseminate or disclose the contents of this message and/or any attachment to any other person. Please notify the sender and delete this message and any attachment from your system. Malaysian Rating Corporation Berhad (“MARC”) accepts no liability in respect of prohibited and unauthorised use by an unintended addressee or recipient. Any opinion, view or other information in this message and/or any attachment hereto which does not relate to the official business of MARC is that of the individual sender. Although this email and/or any attachment is believed to be free of any virus or other defect which may affect any computer system into which it is received and opened, it is the responsibility of the recipient to ensure that it is virus-free and MARC accepts no responsibility for any loss or damage arising in any way from the use thereof.
FW: RHB | Malaysia | Inflation Normalises In Early 2018
Economic Research | 28 February 2018 | |||
Malaysia | ||||
Economic Update | ||||
Inflation Normalises In Early 2018 The headline inflation rate normalised to 2.7% YoY in January (+3.5% in Dec 2017). This was mainly due to a slower rise in F&B and transportation costs during the month. Going forward, we expect headline inflation to moderate to 3% in 2018, from +3.7% last year, due to a smaller increase in oil prices compared to 2017. That said, the resiliency of domestic demand should continue to support elevated prices ahead. Bank Negara Malaysia (BNM) is likely to hike rates one more time in 2018. After hiking the overnight policy rate (OPR) by 25bps in January, the central bank stated that it would continue to assess the balance of risks surrounding the outlook for domestic growth and inflation. This suggests that further hikes would likely be data-dependent. Economists: Vincent Loo Yeong Hong | +603 9280 2172 Aris Nazman Maslan | +603 9280 2184 | ||||
To access our recent reports please click on the links below: 21 Feb : Exports Growth To Remain Healthy After Surging In 2017 15 Feb : Current Account Surplus To Narrow In 2018 14 Feb : 2017 GDP Growth Strongest In Three Years 12 Feb : 4Q17 Economic Activity Remains Healthy Despite Slowdown 08 Feb: Exports Ease in December but Cap a Robust Year | ||||
Economics Team | ||||
Arup Raha | Group Chief Economist | +65 6232 3896 | ||
Peck Boon Soon | Chief ASEAN Economist | +603 9280 2163 | ||
Vincent Loo Yeong Hong | Malaysia, Vietnam, | +603 9280 2172 | ||
Rizki Fajar | Indonesia, Philippines | +6221 2970 7065 | ||
Aris Nazman Maslan | Malaysia, Vietnam | +603 9280 2184 | ||
FW: Fixed Income Daily Pulse - 28 February 2018
Good Evening, | |||||||||||||||||||||||||||||||||||||||||||||||||||
Today’s trade recap by our trading desk:- | |||||||||||||||||||||||||||||||||||||||||||||||||||
· Overnight global markets saw Jerome Powell’s first congressional testimony as new Fed Chair; among many things, reiterating his predecessor’s plans to stick with gradual path for interest rate hikes. While initial market reaction was rather muted, UST yields largely rose after market deemed his testimony hawkish with UST 10Y ticking up to high of 2.912%. Despite rising global yields, trading activities of local bonds were rather decent with prices largely quoted firmer from the belly to the long-end of the curve. Yields eased 1-3bps from the belly towards the back end with renewed market interest in 7Y MGS 9/24 throughout the day. On the data front, Malaysia’s January CPI was released today at 2.7%; slightly below market expectations (F: 2.8%; P: 3.5%). | |||||||||||||||||||||||||||||||||||||||||||||||||||
Malaysia Government Bonds Benchmark Issues
Source: BondStream, AmBank | Interest Rate Swap Closing Rates
Source: Bloomberg, AmBank | ||||||||||||||||||||||||||||||||||||||||||||||||||
Best regards,
Fixed Income Research & Strategy
AmBank Research, AmBank (M) Berhad
+603 2036 2255 (DL) +03 2031 7218 (Fax)
Level 15, Bangunan AmBank Group, 55 Jalan Raja Chulan, 50200 Kuala Lumpur
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DISCLAIMER:
This message may contain confidential and privileged information for its intended recipient(s) only. If you are not an intended recipient, you are hereby notified that any review, dissemination, and distribution, printing or copying of this message or any part thereof is strictly prohibited. Please delete the entire message and inform the sender of the error. Any opinions, conclusions and other information in this message that are unrelated to official business of AmBank Group are those of the individual sender and shall be understood as neither explicitly given nor endorsed by AmBank Group.
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Wednesday, February 28, 2018
FW: RHB | Singapore | Loans Growth The Strongest In Three Years
Economic Research | 28 February 2018 | |||
Singapore | ||||
Economic Update | ||||
Loans Growth The Strongest In Three Years Singapore’s M3, including Asian currency units, picked up to 4.5% YoY in January. This was mainly on the back of a stronger growth in net foreign positions during the month, while government deposits declined at a slower pace. These were, however, partly offset by slower increases in both public and private credit growth. Going forward, we maintain our expectations for M3 to accelerate to +6.2% in 2018 from 4.1% in 2017. This is premised on a strong SGD, rising economic prospects, and a pick-up in property transactions. Economists: Vincent Loo Yeong Hong | +603 9280 2172 Aris Nazman Maslan | +603 9280 2184 | ||||
To access our recent reports please click on the links below: 26 February : IPI Picks Up In Early 2018 26 February : Inflation Stagnated in January 19 February: 2017 GDP Beat Forecasts, Growth To Slow But Broaden 19 February: January NODX Growth Shows Broadening Signs 15 February: Budget 2018: GST Hike, E-Commerce Tax Expected | ||||
Economics Team | ||||
Arup Raha | Group Chief Economist | +65 6232 3896 | ||
Peck Boon Soon | Chief ASEAN Economist | +603 9280 2163 | ||
Vincent Loo Yeong Hong | Malaysia, Vietnam | +603 9280 2172 | ||
Rizki Fajar | Indonesia, Philippines | +6221 2970 7065 | ||
Aris Nazman Maslan | Malaysia, Vietnam | +603 9280 2184 | ||
FW: RHB FIC Credit Markets Update - 28/2/18
28 February 2018
Credit Markets Update
USTs Fall After Fed Powell Testimony; Malaysia CPI Jan 18 Print Today.
MYR Credit Market:
¨ MGS ended mixed; USD strengthens. The reopening of 10y MGS 11/27 garnered a decent BTC of 2.07x with an average yield of 4.055%, a healthier demand compared to similar auctions in Jul 17 and Dec 17. The yields on longer end of the curve fell further which saw the 10y and 30y MGS supported at 4.03% (-1.9bps) and 4.82% (-1.3bps) ahead of Malaysia’s inflation reading Jan 18 scheduled later today. The 3y MGS yields ended lower to 3.38% (-0.4bps) while the 5y MGS weakened to 3.62% (+2.1bps). The MYR seen paring gains as it traded -0.13% lower against the greenback, closing at 3.9080/USD, on the back of USD rebound.
¨ Govvies trading activities picked up strongly with transactions recorded at MYR4.5bn. Trade volume for govvies tripled from the previous day with concentration largely skewed towards the reopened 10y MGS 11/27, top traded security for the day which amounted to MYR1.1bn. The 10y benchmark MGS last traded stronger at 4.03% (-1.9bps). We opine 10-year benchmark MGS above 4.00% seen attracting some real money interest. The benchmarks MGS 3y 02/21 and 5y 03/22 saw MYR130m and MYR161m change hands each where yields ended mixed at 3.38% (-0.4bps) and 3.62% (+2.1bps) respectively. The benchmarks 5y, 7y and 15y GIIs were also actively traded with MYR111m for the 04/22, MYR130m for the 08/25 and MYR220m for the 06/33 transacted respectively, dealt at 3.89% (-0.1bp), 4.11% (-0.2bps) and 4.59% (-0.7bps). The off-benchmarks MGS 11/26 and 08/23 also drew strong trade interest with total trades of MYR425m and MYR414m with the respective yields edged up to 4.11% (+0.7bps) for the longer-dated security and the former at 3.83% (+2bps).
¨ Secondary flows remained robust as trade volume recorded for corporate bonds/sukuks just under MYR520m. The most actively traded security was TENAGA 8/37 with MYR135m recorded, rallying to 5.10% (-0.8bps). This was followed by DANAINFRA 5/32 and 4/45 with combined transactions of MYR70m where yields climbed to 4.85% (+4.5bps) and 5.27% (+6.8bps) respectively while TMSB 22s, 25s, 26s, 33s and 35s saw combined trades of MYR60m which saw yields ending mixed between 4.60% and 5.50% (ranging -7.1bps and +1.8bps). Other notable trades were DANGA 1/33 and CIMB THAI 7/24 with MYR50m changed hands each, rallying to 4.93% (-1.1bps) and 4.79% (-4.3bps) respectively.
¨ Over in primaries, Inverfin Sdn Bhd has issued MYR160m 6y-note under its AAA rated MYR185m Tranche A MTN programme with coupon rate of 4.98%.
APAC USD Credit Market:
¨ US Treasuries yields on the rise after Fed Chair Powell testimony. The USTs yields were seen rising across the tenure, led by the belly of the curve, pressuring the 2y, 5y and 10y USTs upward to 2.26% (+3.81bps), 2.66% (+5.04bps) and 2.89% (+3.11%) respectively following the recent remarks made by new Fed Chair Powell at his testimony debut before the House Financial Services Committee. He expressed confidence on the strengthening economic conditions in the US and inflation to accelerate on a “sustained basis” while supporting the need for gradual rate hikes going forward. He will appear before the Senate Banking Committee on Thursday. The USD regained traction which saw the DXY move up to 90.4 (+0.56%). Meanwhile, economic data revealed mixed results. Advance goods trade balance deficit Jan 18 unexpectedly deteriorated to –USD74.4bn (consensus: -USD72.3bn) from revised figure of –USD72.3bn. Wholesale inventories beat estimates as it rose 0.7% (consensus: 0.4%) from 0.6% previously. Durable goods orders, however, declined more than initially projected by 3.7% (consensus: -2%) from an increase of 2.6% during the same period. The Conference Board’s consumer confidence soared to new highs with a reading of 130.8 from revised 124.3.
¨ The iTraxx AxJ IG credit spreads rallied further to 67.7bps (-0.5bps). Over in CDS space, leading the rally was CapitaLand Ltd. which saw CDs levels fall approximately -2.5bps. Seeing a similar decline rate was PCCW-HKT Telephone Ltd. and Swire Pacific Ltd. with spreads reduction about -1.3bps, trailed by Chinese Fis China Development Bank and Export-Import Bank of China with drop rate close to -1.1bps. Other notable players include Kookmin Bank and Korea Electric Power Corp. with identical tightening around -1bp. Leading the widening, on the other hand, was State Bank of India/London which saw CDS levels deteriorate nearly +2.3bps.
¨ Moody’s has changed the outlook on IDBI Bank Ltd. upward from B1/Sta to B1/Pos. This is driven by possible improvement to its capital position on the back of capital infusion from the Indian government. IDBI is expected to receive INR78.81bn in new capital by Mar 18 as part of the INR1.53trn recapitilisation plan. Moody’s forecasts IDBI’s CET-1 ratio increasing to approximately 9.8% based on the risk weighted assets as of Dec 17, though likely to incur losses over the next few quarters due to high provisioning costs. Moody’s, however, opines IDBI’s CET-1 ratio to meet minimum Basel III capital requirements by Mar 19. IDBI recorded slightly lower NPA ratio in the recent quarter ending Dec 17 at 24.7% compared to 25% in the quarter ending Sep 17. NPA also stabilised at 14.3% during the same period. Moody’s has also revised the outlook on John Deere Ltd/Australia (Deere) upward from A2/Neg to A2/Sta. This reflects Moody’s expectation that Deere will strengthen its position in the industry while financial performance likely to be buttressed by the improving agriculture markets conditions. This is further supported by its Shareholder Value Added (SVA) model that is intended to moderate impacts from cyclical downturns on financial performance. Deere’s liquidity as of Jan 18 remained healthy with combined liquidity sources of around USD15.4bn, which includes USD4.4bn in cash and marketable securities, USD7.5bn in committed credit facilities as well as USD3.5bn 3-yr securitization conduit. Nonetheless, Moody’s does not see any upgrade at this juncture given the inherent cyclicality in core markets.
