Asian bond markets settled mixed post-FOMC. IG credit spreads widened slightly to 176.5bp (+1.15bp), whereas average HY bond yields tightened 3bps to 6.51%. Asian credit protection cost inched higher to 83.4 (+0.5bp), bucking the tightening trend over the past 6 consecutive days driven by o

16 June 2017

Credit Markets Update

                                               

DM Bond’s Shift Move Global Bonds

MYR Credit Market:

¨      DM bond shift moves local market. Markets post FOMC and Macron continue to shift as US and Europe leads volatile shift. Markets reeled from the weakness seen in the Treasury and European bond markets overnight. The latest moves which occurred overnight is expected to be the catalyst for further volatility in local currency bond and currency markets. The currency market took a beating in EM Asia. The MYR closed 0.23% weaker at 4.2675/USD wiping out all gains for the week. The 3y MGS saw a surprising rally, as it fell a further -3.8bps to 3.23%. The 10y MGS saw a weakening to 3.87% (+1.4bps). With the shifts in DM, we do not expect the MGS market to be supported for the rest of the week.

¨      Trading returns to the govvies. Trading in of Malaysian govvies came back once more as we saw over MYR4.9bn changing hands. MYR422m of which was the new issues of GII 07/27 which saw an overnight rally of -3bps. The short end of the market saw the 18s and 19s see trades worth MYR465m and MYR1.7bn respectively. 

¨      Trading in the corporate space remained healthy. Trading in Malaysia corporates amounted MYR481m. Trading was largely concentrated in Prasarana and DanaInfra bonds. PRASARANA 09/27s saw MYR60m of bonds change hands while DANAINFRA 04/39s saw MYR40m of trades. Both were last traded at 4.44% (+0.7bps) and 50.7% (-0.9bps) respectively.

APAC USD Credit Market:

¨      UST yields rise; reversing the plunge seen post-FOMC. Yields were on the rise as investors digested the better-than-expected US economic data overnight and higher European government bond yields following the surprisingly hawkish BoE. Initial jobless claims was lower at 237k (consensus: 241k) while empire manufacturing and Philadelphia Fed business outlook index reached 19.8 (consensus: 5.0) and 27.6 (consensus: 24.9) respectively. UST 2y rose 2bps to 1.35%, while the 10y gained 3.8bps to 2.16%.

¨      Asian bond markets settled mixed post-FOMC. IG credit spreads widened slightly to 176.5bp (+1.15bp), whereas average HY bond yields tightened 3bps to 6.51%. Asian credit protection cost inched higher to 83.4 (+0.5bp), bucking the tightening trend over the past 6 consecutive days driven by oil refiners - Reliance Industries and GS Caltex.

¨      On new supply, Hainan Airlines (NR) sold USD300m Reg S June-18 bonds at 5.50% compared to IPT at 5.75% area. Greenland Global Investment Ltd (expected rating: NR) guaranteed by Greenland Holdings Group (Ba1/BB/BB) priced USD500m 6/18’ bonds at 4% or 25bps inside IPT. The group will also be holding investor meetings in Hong Kong later today for additional USD Reg S bond deal.

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