Tuesday, 17 July 2018

China recovers, while Indonesia and Malaysia slump

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China appeared to regain positive momentum today, after a run of bad news deterred investors from its credits.

Chinese state-owned enterprises and investment-grade credits were better bid today and around 2bp tighter, with strong demand seen for technology names.

Malaysia and Indonesia did not do well. Indonesia high-yield was down 10 points for the week and the continued weakness in commodity prices did not help. “There is little support, and investors are happy to watch it drop,” said one trader.

Malaysia’s sovereign CDS was around 5bp wider today, with Asian CDS volumes having tripled over the summer with the spike in volatility.

Noble Group’s 2020s dropped 4 points to around 84.8/86.6, after its CEO raised the prospect today of selling assets. It had already declined 2 points on Monday.

Investors were generally bullish on Indian credits, but that could not stop Vedanta and Rolta from dropping 0.75 and 2 points, respectively.

Primary Markets

The Philippines was considering issuing US$750m of sovereign bonds later this year to fund its 2016 needs, National Treasurer Roberto Tan told IFR and Reuters in an interview. He noted that the government preferred to issue longer-term debt, and said that there were no plans to print in euros.

Bank of Communications has added a three-year euro tranche to the offering of five-year US dollar bonds announced this morning.

The three-year floater is indicated at three-month Euribor plus 120bp area, with the size yet to be announced.

Pricing on the benchmark-size five-year dollar bonds is indicated at Treasuries plus 190bp area.

The bonds, expected to be rated A–/A (S&P/Fitch), will be issued through subsidiary Azure Orbit II International Finance, with BoCom’s Macau branch providing a guarantee.

BoCom’s Hong Kong and international divisions, ANZ, HSBC and Standard Chartered are joint bookrunners on both tranches.

Philippines port operator International Container Terminal Services is marketing senior perpetual US dollar bonds in the 5.75% area.

The unrated bonds will be issued through subsidiary Royal Capital BV with ICTSI as guarantor.

The bonds can be called on May 5 2021 and every five years thereafter.

Citigroup, Credit Suisse and Standard Chartered are joint bookrunners.

Oversea-Chinese Banking Corporation has started bookbuilding for its first Basel III-compliant Additional Tier 1 issue, which is expected to generate keen interest.

The Singapore dollar non-cumulative, non-convertible perpetual, with a call at year 5, is being marketed at a guidance of 4% area.

The bonds will be rated A3/BBB–/BBB, way below the issuer’s Aa1/AA–/AA–.

OCBC is sole bookrunner and will be joint lead manager with Citigroup and JP Morgan.

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