SG Bonds Weekly – Week 18 May 3, 2021 166

Outlook for the week

We view high yield bonds as more favourable given historically cheap valuations (Figure 2) and higher buffers against rising interest rates. These include the KOHSP 5.1% 27Oct2022, ESRCAY 5.65% Perpetual, and EREIT 4.6% Perpetual.

Key economic releases for the week

  • Mon, 3 May: Earnings: GREAT EASTERN HOLDINGS – Bef Mkt, SG: Purchasing Managers Index (9:00PM), US: Markit US Manufacturing PMI (9:45PM)
  • Wed, 5 May: Earnings: AIMS APAC REIT – Bef Mkt, SG: Retail Sales YoY (1:00PM), US: Markit US Services PMI (9:45PM)
  • Thu, 6 May: Earnings: FRASERS LOGISTICS & COMMERCIAL TRUST – Bef Mkt, SINGAPORE POST – Bef Mkt, UNITED OVERSEAS BANK – Bef Mkt, US: Initial Jobless Claims (8:30PM)
  • Fri, 7 May: Earnings: OVERSEA-CHINESE BANKING CORP – Bef Mkt, SG: Foreign Reserves (5:00PM), US: Change in Nonfarm Payrolls (8:30PM)

 

Last Week Summary

In Asia credit space, China Huarong took a 3-notch Fitch downgrade to BBB last Monday. ICBC also supported the company by extending a loan for the repayment of S$600mn bonds that matured last Tuesday. This came after Chinese regulators called for banks to extend support to Huarong. In the primary market, despite deal volumes dropping drastically WoW (-80%), book coverage ratios was much higher at 6.4x compared to 4.5x. Average Initial Price Guidance Tightening also increased to 32.7bps compared to 28.6bps the week before. Issuance was skewed towards the 5yr tenor, with half of last week’s deals (6 out of 12) being priced on the 5yr. US$3.54bn of bonds was issued from 12 deals: Investment Grade: US$2.4bn, High Yield: US$882mn, Non-Rated: US$260mn.

  • 4 outstanding mandates remain from last two weeks

 

 

 

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About the author

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Timothy Ang
Research Analyst
Phillip Securities Research

Timothy covers credit analysis of local and foreign bonds. Previously an equity dealer, he handled equity trade execution and portfolio management. He has presented seminars for organisations such as SIAS, SPH and IRAS, commentated live market updates for 93.8FM, and authored investment articles for the Business Times newspaper. He graduated with a Bachelor of Commerce in Accounting & Finance from the University of Western Australia.

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