22August2016

CIMB FIXED INCOME RESEARCH

DAILY FIXED INCOME COMMENTARY

USTreasuries

Tenure
18Aug
(Yrs)
(%)
2
0.70
5
1.11
10
1.54
30
2.26
Source:Bloomberg

19Aug
(%)
0.75
1.16
1.58
2.29

US Treasury yields rose across the curve on Friday, amid anticipation of incoming
primary supplies totalling $88 billion this week. On the other hand, players turned
cautiousandawaitedfortheFedchiefJanetYellensspeechinJacksonHoleconference
scheduledon26Aug.
TheUSTreasuryDepartment willconductauctionsfor 2T ($26 billion),5T($34 billion)
and7T($28billion).

Chg
(bps)
+5
+5
+4
+3

FxMarkets

19Aug
USD/JPY
100.22
EUR/USD
1.1325
USD/MYR
4.0157
USD/IDR
13163
USD/SGD
1.3467
USD/THB
34.640
Source:Bloomberg

USDremainedweak,butrecoveredatadaheadofweekend.EUR/USDparedgainsafter
peaking near 1.1350 in the early session on Friday. Meantime, USD/JPY dipped below
100.00 but eventually moved higher and settled at 100.22. We think that USD should
see better support due to possible short covering ahead of Fed chief Janet Yellens
speechinJacksonHoleconference.
Ontheotherhand,regionalcurrenciesweakenedagainstUSD.USD/IDRedgedhigherto
13163, whilst appeared to be well supported near 13050. Similarly, USD/SGD climbed
andhoveredattheimmediateresistanceat1.3480.

22Aug
100.69
1.1288
4.0278
13163
1.3509
34.698

LocalCurrencyBonds

Tenure
(Yrs)
3yMGS
5yMGS
10yMGS
20yMGS
5yMYRIRS
3mKLIBOR
3yTHBGov
5yTHBGov
10yTHBGov
20yTHBGov
5yTHBIRS
3yIDRGov
5yIDRGov
10yIDRGov
15yIDRGov

18Aug
(%)
2.88
3.18
3.50
4.15
3.43
3.40
1.73
1.78
2.15
2.53
1.83
6.43
6.53
6.79
7.16

19Aug
(%)
2.90
3.17
3.52
4.16
3.43
3.40
1.73
1.77
2.15
2.53
1.83
6.43
6.57
6.83
7.19

Chg
(bps)
+2
1
+2
+1
0
0
0
1
0
0
0
0
+4
+4
+3

Source:Bloomberg,ETP,ThaiBMA,IBPA,
CIMBestimates

Ringgit govvies moved in sideways ahead of weekend. In the short to medium term
period, we think that Ringgit bonds will remain supported amid the low yielding
environmentandspeculationsoffurthereasingbyBankNegaraMalaysialaterthisyear.
NeartermmarketdriverswillincludetheJulinflationdataslatedforreleaseon24Aug,
with economists projecting a rise of +1.1% yoy from +1.6% in Jun. Apart from that,
playersalsoawaittheannouncementfor10yearMGSreopeningauction.
Thai govvies closed relatively flat, whilst activities continued to be led by LB176A on
Friday.Wethinkthatthelongdatedbondsmaycontinuetoseepressurewithprimary
suppliesontapLB466A(24Aug)andLB366A(31Aug).
Ontheotherhand,foreignreservesinchedlowerinchedlowerto$181.8billionasat11
Aug,incontrastto$182.5billionaweekprior.
IndonesiangovernmentbondsweretradedinrangeinthefirstsessiononFriday,whilst
market was seen with bidding interest amid positive sentiment. However after the
break,bondsweretradedlowerinpriceassomeprofittakingactionwasseenaheadof
theafternoon'sBImeetingresultannouncement.MarketvolumeincheduptoIDR15.3
trillion and was dominated by bonds maturing in over 10 years (67%) and bonds
maturingbetween1and5years(24%).
Indonesian credit market was dominated by a few names on Friday. Waskita Karya
Jun19 (A), Bank BRI May19 (AAA) and WOM Finance Apr18 (AA) were the most
activelytradedbyvolume,held64%ofmarketshare.MarketvolumejumpedtoIDR569
billion.

Pleasereadcarefullytheimportantdisclosuresattheendofthispublication.

AsianDollarCredits

Asiandollarcreditsstoodonstrongerfooting,followingthereleaseofalesshawkish
thanexpectedFedminutes.Also,positivesentimentwassupportedwithBrentcrude
appearedtobefirmabove$50/bblaheadofweekend.
Elsewhere,Modernlandtapped$57.426milliononitsexistingbondmaturing2019at
108.125pts,incontrastto107.50ptsguidedearlier.

Issuer
Malay26
Malay46
Petrol26
Petrol45
Cagamas19
EIBMAL19
Axiata4.357%26
ThaiOil23
Source:Bloomberg

Ratings
Moodys
A3
A3
A1
A1
A3
A3
Baa2
Baa1

S&P
A
A
A
A

BBB

Tspread

Tspread

Tspread

Vs.UST

Zspread

18Aug
97
103
140
130
144
150
142
143

19Aug
95
102
137
127
144
150
140
143

Change
2
1
3
3
0
0
2
0

Benchmark
10T
30T
10T
30T
2T
2T
10T
10T

19Aug
110
157
153
184
111
121
157
175

Issuer
Malaysia
Thailand
Indonesia
Philippines
Source:Bloomberg

Ratings
Moodys
A3
Baa1
Baa3
Baa2

S&P
A
BBB+
BB+
BBB

18Aug
118
88
138
87

5yearCDS
19Aug
117
85
136
86

Chg
1
3
2
1

EconomicNews

Singapore'sconsumerpriceindex(CPI)isexpectedtoshowanannualdeclinefora21ststraightmonthinJuly,aReuterspoll
showed,butsomeanalystssaypricesmayhavebottomedoutandtheindexcouldreturntopositiveterritorybytheyearend.The
medianfromaReuterssurveyof12economistswasfortheCPItohavefallen0.5percentinJulyfromayearago.InJune,theCPI
fell0.7percent,extendingarecordrunofconsecutiveyearonyeardeclinesinheadlineCPIto20monthsthelongeststreaksince
Singapore'sindependencein1965.Reuters

Singaporesdomesticwholesaletradecontracted22.6percentyearonyearinthefirstquarterof2016,saidtheDepartmentof
Statistics(DOS)onFriday.Excludingpetroleum,however,thedropwaslesssevere,withan11.4percentdecline."Thedeclinein
nominal domestic wholesale trade was due partly to lower prices of petroleum and chemical products. After adjusting for price
changes,overalldomesticwholesaletraderegisteredasmalleryearonyeardecreaseof1.7percent,"saidDOS.Reuters

Indonesias central bank left its new benchmark interest rate unchanged in a decision that split economists, while lowering
borrowingcostsforcommercialbankstohelpspurlendinginSoutheastAsiaslargesteconomy.GovernorAgusMartowardojo
and his board kept the sevenday reverse repurchase rate at 5.25 percent on Friday, as forecast by half of the 24 economists
surveyedbyBloomberg,whiletheresthadpredictedacutof25basispoints.Itloweredthelendingfacilityratewhichistherate
atwhich commercial lenders can borrowfrom thecentralbank by 100 basis points to 6 percent.BankIndonesiaadopted the
reverserepurchase rate asits maintooltobetterinfluenceborrowingcostsintheeconomyafterfourcuts toitsreference rate
earlierthisyearfailedtospurlending.Thatgivesthebankscopetopausewhileitassessestheeffectivenessofthenewbenchmark
beforeadjustingpolicyagain.Bloomberg

CorporateNews

FitchgivesthumbsuptoMaybank,HongLeongBank
FitchRatingshasupgradedtheratingsofHongLeongBankBhdandrevisedtheoutlookonMalayanBankingBhd'sratingstoStable
fromNegative.TheinternationalratingsagencysaidonFridayitupgradedHongLeongBank'slongtermissuerdefaultratings(IDR)
to'A'from'BBB+'withastableoutlookasthelatter'sexistingstrengthsarelikelytobepreservedinthemediumterm,despitethe
domesticeconomicchallenges.FitchsaidtheupgradeofHongLeongBank'sIDRsandviabilityrating(VR)reflecteditsstrengthened
capitalisation,aswellasitslongstandingprudentriskappetite,soundassetqualitytrackrecord,andstablefundingandliquidity
profile.TheStar

SapKendeliverssixthandfinalpipelayvesseltoPetrobras
SapuraKencanaPetroleumBhd(SapKen)hasdelivereditssixthandfinalpipelayvessel(PLV),SapuraRubi,toPetrleoBrasileiroS.A
(Petrobras).ThevesselcommencedworkinBrazilonAugust14,2016.ThegroupsoffshoreoperationsinBrazilforPetrobrasare
being executed there by its Brazilian joint venture company Sapura Navegacao Maritima (SNM), a 50:50 venture with offshore
2

drilling company Seadrill Ltd. SNM was awarded two longterm major contracts, worth a total of US$4.1bil, by Petrobras in
November2011andJune2013.TheStar

MARCaffirmsfinancialinstitutionratingsofAA/MARC1onHongLeongInvestmentBankBhd
MARChasaffirmedthelongtermandshorttermfinancialinstitution(FI)ratingsofAA/MARC1onHongLeongInvestmentBank
Berhad (HLIB). The outlook on the ratings isstable.The ratings reflect HLIB's steady business and credit profile which are
underpinned by its position as the capital market arm of Hong Leong Financial Group Berhad (HLFG), one of Malaysias largest
financialservicesgroups.Theratingsaremoderatedbytheinvestmentbankssusceptibilitytocapitalmarketconditionsandthe
prevailingintensecompetitionintheinvestmentbankingindustry.MARC

MARCaffirmsBankPembangunansfinancialinstitutionandCPprogrammeratingsatAAAandMARC1is/MARC1respectively
MARC has affirmed itsAAAfinancial institution (FI) rating on Bank Pembangunan Malaysia Berhad (Bank Pembangunan).
Concurrently,theratingagencyaffirmeditsMARC1IS/MARC1programmeratingsonthebanksIslamic/ConventionalCommercial
Papers (CP) Programme of up to RM2.0 billion. The ratings carry astableoutlook.The affirmed FI rating is based on MARCs
assessment of high government support for Bank Pembangunan, given the banks status as a wholly governmentowned
developmentfinancialinstitution(DFI)andthebanksroleinsupportingdomesticeconomicdevelopmentactivitiesbyextending
loans and financial support to specific industries promoted by the government. The assessment is backed by strong historic
evidenceofgovernmentalsupportextendedtoBankPembangunanbywayofguaranteesonborrowingsaswellascompensations
forlossofinterestincomeandcreditlossoncertaingovernmentdirectedloans.MARC

PharmaniagapostslowerQ2earnings
Pharmaniaga Bhd posted a lower net profit for the second quarter ended June 30 at approximately RM15mil, compared to
RM16.2milayearago,impactedby higher ammortisationandfinancecost.Revenueforthe quarterwasat RM531.8mil against
RM512.8mil.Forthesixmonths,PharmaniagasnetprofitstoodatRM33.4milcomparedtoRM48milinthesamecorresponding
periodlast year.Revenue for thefirst halfof theyearwasat RM1.09bilcompared toRM984.7millast year.Thepharmaceutical
companydeclaredasecondinterimdividendof5senpershareforthefinancialyearendingDec31,2016.Thedividendwillbepaid
onSept20toshareholdersontheregisterasatSept6.TheStar

AffinHoldingssecondquarterprofitdipstoRM137mil
Affin Holdings Bhd posted a drop of 1.4% in its net profit to RM137.4mil in the second quarter ended June 30, 2016 from
RM139.milayearagoonthebackof revenueofRM476.7milinthesecondquarterfromRM449.2milpreviously.Inafilingwith
Bursa Malaysia yesterday, the banks net profit for the first half of the year surged by almost 50% to RM252.96mil from
RM169.5milayearago.Revenueforperiodroseby3%toRM903.6milcomparedtoRM877.9milpreviously.TheStar

CIMBRegionalFixedIncomeResearchTeam

NikAMukharriz
Head,RegionalFixedIncomeResearch
MikaMartumpal
Analyst

ahmadmukharriz.muhammad@cimb.com
mika.martumpal@cimbniaga.co.id

+60(3)22618557
+62(21)2505151

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