Global Markets Research Fixed Income

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Dwayne West
6 years ago
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1 Global Markets Research Fixed Income Fixed Income Daily Market Snapshot UST Tenure Closing (%) Chg (bps) 2-yr UST yr UST yr UST yr UST M GS GII* Tenure Closing (%) Chg (bps) Closing (%) Chg (bps) 3-yr yr yr yr yr yr yr * M arket indicative M YR IR S Levels IRS Closing (%) Chg (bps) 1-yr yr yr yr yr Source : Bloomberg US Treasuries US Treasuries continued its rally for the 3 rd session yesterday with overall yields lower between 1-4bps across the 5-30Y curve which saw bull-flattening following a mixed bag of indicators that included the weakness in US equities. The front end 2Y (which is sensitive to Fed policy interest rate expectations) was little changed (< 1bps) at 2.26% whilst the much-watched 10Y closed 3bps lower at 2.82%. Meanwhile investors and traders that predicted a possibility of the 10Y breaching 3.0% seemed less convinced now amid trade tensions and estimates of slower 1 st quarter growth. Upcoming data tonight are the Industrial Production figures. MGS/GII Local Govvies saw massive secondary market volume at RM5.16b on foreign-led buying with interest across all tenures. Overall yields were generally flat to 3bps lower with the new 7Y MGS 3/25 at 3.82% and the widely-watched 10Y MGS 11/27 at 3.94%. These two benchmarks alone accounted for 20% of total volume generated. Meanwhile BNM s statement on Malaysia s domestic financial stability which continues to be preserved and supported by sound financial institutions and orderly domestic financial markets was well-received by investors. Upcoming Government Bond Tenders Corp Bonds/Sukuk Secondary market volume for Corporate Bonds saw a recordbreaking session for the year at RM1.03b with interest seen across the GG-AA3 part of the curve. There was a deluge of Govt-Guaranteed and AAA-rated bonds traded. PTPTN 32 s saw RM200m traded 1bps higher closing at 4.85% levels compared to previous-done levels. The longer-end DANA bonds i.e s rallied some 2-6bps between % levels whereas the s also was well bid closing between % levels. In the AAA-space the new CAGA 11/20 closed unchanged at 4.10% on RM225m whilst the mid-long end power-related bonds i.e. TNB Western and MANJUNG saw immense interest as well. Similarly, AA-rated SEB 12/32 and YTL Power 5/27 closed mixed at 5.24% and 5.25% respectively. Southern Power Generation also traded largely lower on yields. Expect upbeat interest to continue. 1

2 Daily Trades : Government Bonds Securities Closing Vol Previous Previous Chg YTM (RM mil) YTM Trade Date (dd/mm/yyyy) (bp) MGS 09/ /03/ MGS 03/ /03/ MGS 10/ /03/ MGS 03/ /03/ MGS 07/ /03/ MGS 10/ /03/ MGS 02/ /03/ MGS 07/ /03/ MGS 09/ /03/ MGS 11/ /03/ MGS 03/ /03/ MGS 09/ /03/ MGS 03/ /03/ MGS 08/ /03/ MGS 09/ /03/ MGS 03/ MGS 09/ /03/ MGS 09/ /03/ MGS 03/ /03/ MGS 11/ /03/ MGS 06/ /03/ MGS 09/ /03/ MGS 04/ /03/ MGS 04/ /03/ MGS 04/ /03/ MGS 09/ /03/ GII 08/ /03/ GII 04/ /03/ GII 03/ /03/ GII 04/ /03/ GII 07/ /03/ GII 07/ /03/ GII 08/ /03/ GII 09/ /03/ GII 07/ /03/ GII 06/ /03/ GII 08/ /02/ GII 05/ /03/

3 Daily Trades: Corp Bonds / Sukuk Securities Rating Closing Vol Previous Previous Chg Spread YTM (RM mil) YTM Trade Date (dd/mm/yyyy) (bp) Against MGS* Pengurusan Air SPV Berhad 06/18 GG /03/ DanaInfra Nasional Berhad 05/31 GG /05/ Perbadanan Tabung Pendidikan Tinggi Nasional 03/32 GG /02/ DanaInfra Nasional Berhad 05/32 GG /03/ Perbadanan Tabung Pendidikan Tinggi Nasional 08/32 GG /03/ DanaInfra Nasional Berhad 11/32 GG /11/ Prasarana Malaysia Berhad [fka Syarikat Prasarana N12/32 GG /02/ DanaInfra Nasional Berhad 05/42 GG /09/ DanaInfra Nasional Berhad 05/47 GG /10/ Malaysia Airport Holdings Berhad 09/18 AAA /11/ Cagamas Berhad 03/20 AAA /03/ Projek Lebuhraya Usahasama Berhad 01/21 AAA /03/ Aman Sukuk Berhad 05/25 AAA /08/ Aquasar Capital Sdn Berhad 07/26 AAA /09/ Projek Lebuhraya Usahasama Berhad 01/28 AAA /03/ Aquasar Capital Sdn Berhad 07/28 AAA /11/ TNB Western Energy Berhad 01/29 AAA /10/ TNB Western Energy Berhad 07/29 AAA /06/ Aman Sukuk Berhad 05/30 AAA /08/ TNB Western Energy Berhad 01/32 AAA /03/ TNB Northern Energy Berhad 11/33 AAA /09/ Manjung Island Energy Berhad 11/23 AAA /11/ Aldhazab ABS 03/25 AAA UniTapah Sdn Berhad 06/19 AA /02/ Sabah Development Bank Berhad 05/22 AA /02/ YTL Power International Berhad 05/27 AA /03/ Sarawak Energy Berhad 12/32 AA /03/ Kapar Energy Ventures Sdn Berhad 07/18 AA /02/ Kesas Sdn Berhad 10/18 AA /02/ UMW Holdings Berhad 02/21 AA /01/ UMW Holdings Berhad 10/23 AA /02/ Tanjung Bin Power Sdn Berhad 08/25 AA /10/ CIMB Bank Berhad 10/38 AA /03/ Gamuda Berhad 03/19 AA /02/ Jimah Energy Ventures Sdn Berhad 05/20 AA /04/ Jimah Energy Ventures Sdn Berhad 11/22 AA /10/ AmBank (M) Berhad 12/23 AA /01/ Anih Berhad 11/18 AA /02/ Anih Berhad 11/21 AA /04/ UEM Edgenta Berhad [fka Faber Group Berhad] 04/22 AA /03/ WCT Holdings Berhad 05/22 AA /02/ UEM Sunrise Berhad (fka UEM Land Holdings Berhad 12/22 AA /02/ MMC Corporation Berhad 11/27 AA /02/ Lebuhraya DUKE Fasa 3 Sdn Berhad 08/29 AA /01/ Southern Power Generation Sdn Berhad 04/30 AA /12/ Southern Power Generation Sdn Berhad 10/32 AA /01/ Jimah East Power Sdn Berhad 12/32 AA /02/ Southern Power Generation Sdn Berhad 04/33 AA /02/ Southern Power Generation Sdn Berhad 04/34 AA /03/ Aldhazab ABS 09/26 AA AMMB Holdings Berhad 03/28 A /12/ Mah Sing Perpetual /03/ *spread against nearest indicative tenured MGS (Source : BPAM) 3

4 Market/Corporate News: What s Brewing Malaysia Airport Holdings Berhad (MAHB) plans to expand the KLIA Main Terminal in Sepang and undertake modification and systems upgrade in the next five years as it is reaching full capacity. However, there are no immediate plans to build a third terminal for KLIA, it said in a statement. It said MAHB managing director Datuk Badlisham Ghazali (pic) was misquoted during the ground breaking ceremony of the senior aerospace facility at Subang Aerotech Park on Tuesday. Datuk Badlisham was referring to the KLIA Main Terminal expansion, modification and systems upgrade that are being planned and slated to be built in the next five years, it said. MAHB said KLIA currently has a combined capacity of 75 million passengers per annum and in 2017, it registered 58.6 million passenger traffic movements. Hence, the airport as a whole still has ample capacity to cater for immediate traffic growth. However, MAHB pointed out that the 20-year-old KLIA Main Terminal is already nearing its capacity of 30 million passengers per annum. As such, plans are underway to upgrade and expand this terminal so that it can add further capacity of 15 to 20 million more passengers. Facilities that have been identified to undergo enhancements and upgrading are the baggage handling system and the Aerotrain.The existing terminal building will be expanded and modified to increase the efficiency and facilities such as boarding gates and apron parking. These upgrades and expansion will be completed within the next five years. Badlisham said MAHB is still decades away from adding another new terminal to the KLIA airport system. At the interview, he said The KLIA Masterplan allocates ample land and can cater for more midfield terminals for KLIA and klia2 as well as another runway in the future. At the moment, we are committed to invest in upgrades and expansion of the current terminals to increase capacity. Then only we can talk about a brand new terminal KLIA3, but that is decades away.. ( Source: The Star ) The Asian Development Bank (ADB) has priced a US$3.25 billion 5-year global benchmark bond issue, proceeds of which will be part of ADB s ordinary capital resources. In a statement on its website, ADB Treasurer Pierre Van Peteghem said the bank was pleased with the strong reception to its second benchmark offering in We are happy to accommodate ongoing demand for ADB paper with this new 5-year issue following the solid performance of our dual tranche outing in January, he said. ADB said the 5-year bond, with a coupon rate of 2.75% per annum payable semi-annually and a maturity date of March 17, 2023, was priced at 2.871% to yield 25 basis points over the 2.625% US Treasury notes due Feb 28, The transaction was lead-managed by Bank of America Merrill Lynch, HSBC, Morgan Stanley, and RBC Capital Markets. A syndicate group was also formed consisting of Credit Agricole, Daiwa, DBS Bank, SMBC Nikko, and Wells Fargo. ADB said the issue achieved wide primary market distribution with 39% of the bonds placed in Europe, the Middle East, and Africa, 34% in Asia, and 27% in the Americas. By investor type, 55% of the bonds went to central banks and official institutions, 27% to banks, and 18% to fund managers and other types of investors. ADB said it plans to raise around US$25 billion from the capital markets in ( Source: The Edge ) Rating Actions Issuer PDS Description Rating/Outlook Action Nil Nil Nil Nil Source: RAM Ratings; MARC 4

5 Hong Leong Bank Berhad Fixed Income & Economic Research, Global Markets Level 8, Menara Hong Leong 6, Jalan Damanlela Bukit Damansara Kuala Lumpur Tel: Fax: DISCLAIMER This report is for information purposes only and does not take into account the investment objectives, financial situation or particular needs of any particular recipient. The information contained herein does not constitute the provision of investment advice and is not intended as an offer or solicitation with respect to the purchase or sale of any of the financial instruments mentioned in this report and will not form the basis or a part of any contract or commitment whatsoever. The information contained in this publication is derived from data obtained from sources believed by Hong Leong Bank Berhad ( HLBB ) to be reliable and in good faith, but no warranties or guarantees, representations are made by HLBB with regard to the accuracy, completeness or suitability of the data. Any opinions expressed reflect the current judgment of the authors of the report and do not necessarily represent the opinion of HLBB or any of the companies within the Hong Leong Bank Group ( HLB Group ). The opinions reflected herein may change without notice and the opinions do not necessarily correspond to the opinions of HLBB. HLBB does not have an obligation to amend, modify or update this report or to otherwise notify a reader or recipient thereof in the event that any matter stated herein, or any opinion, projection, forecast or estimate set forth herein, changes or subsequently becomes inaccurate. HLB Group, their directors, employees and representatives do not have any responsibility or liability to any person or recipient (whether by reason of negligence, negligent misstatement or otherwise) arising from any statement, opinion or information, expressed or implied, arising out of, contained in or derived from or omission from the reports or matter. HLBB may, to the extent permitted by law, buy, sell or hold significantly long or short positions; act as investment and/or commercial bankers; be represented on the board of the issuers; and/or engage in market making of securities mentioned herein. The past performance of financial instruments is not indicative of future results. Whilst every effort is made to ensure that statements of facts made in this report are accurate, all estimates, projections, forecasts, expressions of opinion and other subjective judgments contained in this report are based on assumptions considered to be reasonable as of the date of the document in which they are contained and must not be construed as a representation that the matters referred to therein will occur. Any projections or forecasts mentioned in this report may not be achieved due to multiple risk factors including without limitation market volatility, sector volatility, corporate actions, the unavailability of complete and accurate information. No assurance can be given that any opinion described herein would yield favorable investment results. Recipients who are not market professional or institutional investor customer of HLBB should seek the advice of their independent financial advisor prior to taking any investment decision based on the recommendations in this report. HLBB may provide hyperlinks to websites of entities mentioned in this report, however the inclusion of a link does not imply that HLBB endorses, recommends or approves any material on the linked page or accessible from it. Such linked websites are accessed entirely at your own risk. HLBB does not accept responsibility whatsoever for any such material, nor for consequences of its use. This report is not directed to, or intended for distribution to or use by, any person or entity who is a citizen or resident of or located in any state, country or other jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation. This report is for the use of the addressees only and may not be redistributed, reproduced or passed on to any other person or published, in part or in whole, for any purpose, without the prior, written consent of HLBB. The manner of distributing this report may be restricted by law or regulation in certain countries. Persons into whose possession this report may come are required to inform themselves about and to observe such restrictions. By accepting this report, a recipient hereof agrees to be bound by the foregoing limitations. 5

Global Markets Research Fixed Income

Global Markets Research Fixed Income Fixed Income Daily Market Snapshot UST Tenure Closing (%) Chg (bps) 2-yr UST 1.88 2 5-yr UST 2.25 1 10-yr UST 2.48-1 30-yr UST 2.84-3 M GS GII* Tenure Closing (%) Chg