Global Markets Research

Fixed Income

Daily Market Snapshots

29 November 2013
US Treasuries
UST

Closing Yield %

Chg (bps)

2-yr

0.29

5-yr

1.37

10-yr

2.74

30-yr

3.82

US bond markets closed in conjunction with

Thanksgiving celebration. Going into next week,
we expect UST movement to continue tracking
data releases on the US front. Key data to
watch out for include ISM and New Home sales
releases scheduled next week.

Source : Bloomberg

MYR Bond Market

Benchmark MGS Levels

Daily Trades: Government Bonds

MGS
Tenure

Securities

GII*

Closing

Chg
(bps)

Closing

Chg
(bps)

3-yr

3.09

-3

3.35

5-yr

3.60

-5

3.89

-1

7-yr

4.01

4.15

10-yr

4.06

4.41

-1

15-yr

4.28

-5

4.50

20-yr

4.45

4.56

30-yr

4.75

-3

* Market indicative levels

MYR IRS Levels

IRS

Closing Yield (%)

Chg (bps)

1-yr

3.28

3-yr

3.53

5-yr

3.83

7-yr

4.08

10-yr

4.39

MGS
MGS
MGS
MGS
MGS
MGS
MGS
MGS
MGS
MGS
MGS
MGS
MGS
MGS
MGS
MGS
GII
GII
GII
GII
GII
GII
GII
GII

4/14
8/14
8/15
9/15
7/16
9/16
2/17
9/17
10/17
3/18
9/18
7/20
3/23
4/26
6/28
9/43
2/14
7/14
9/14
12/14
7/16
8/18
5/24
8/33

Closing
YTM
3.00
2.99
3.01
3.02
3.09
3.13
3.45
3.51
3.56
3.60
3.72
4.01
4.06
4.31
4.28
4.75
3.00
3.02
3.02
3.05
3.32
3.77
4.41
4.59
Total

Vol
(RM mil)
2
8
11
0
5
16
1
15
10
114
3
1043
16
31
1
3
160
20
400
10
60
10
60
60
2059

YTM

Previous
Trade Date
(dd/mm/yyyy)

Chg
(bp)

2.99
2.96
3.03
3.10
3.12
3.28
3.55
3.51
3.60
3.65
3.74
3.94
4.04
4.34
4.33
4.78
3.00
3.02
3.05
3.06
3.39
3.65
4.40
4.43

26/11/2013
27/11/2013
27/11/2013
27/11/2013
26/11/2013
27/11/2013
22/11/2013
27/11/2013
27/11/2013
27/11/2013
27/11/2013
27/11/2013
27/11/2013
27/11/2013
27/11/2013
22/11/2013
12/11/2013
26/11/2013
26/11/2013
26/11/2013
19/11/2013
16/10/2013
27/11/2013
15/11/2013

1
3
-2
-8
-3
-15
-10
0
-4
-5
-2
7
2
-3
-5
-3
0
0
-3
-1
-7
12
1
16

Source : BPAM

Source : Bloomberg

Trading volume in the MYR govvies garnered traction with total traded volume of over RM2b. Benchmark
yields ended mix with short to mid ends easing. Trading focus was skew towards the newly reopen 7-year
MGS 7/20 with RM1.0b dealt to end the day at 4.01% level. Meanwhile 5-year MGS 3/18 saw volume of
RM114m changing hands, with yields shaved by 5 bps to settle at 3.60% level.

29 November 2013

We opine MGS 7/20 is currently trading at an attractive entry level, which is close to parity versus to 10-year
MGS3/23. We see value in the 7-year and advocate investors to explore this mentioned investment entry. A
closer observation on the MYR govvies curve, suggest that there is a significant kink on the 7-year space.
Yesterdays 7-year MGS 7/20 reopening received a decent demand of 1.77 times. Tender results printed a
low, average and high of 4.000%, 4.029% and 4.060% respectively.
In the GII segment, robust trading volume of RM780m close to 37% of total govvies traded yesterday.
Trading focus was seen on the GII 14s.
Expect trading volume to potentially garner traction today with compelling valuations on the 7-year
MGS.

Daily Trades: PDS / Sukuk

Securities

Rating

ADCB Finance (Cayman) Limited

9/15 AAA (BG)
Malaysia Airport Holdings Berhad
9/16
AAA
Projek Lebuhraya Usahasama Berhad 1/24
AAA
Sabah Development Bank Berhad
7/14
AA1
Public Bank Berhad
11/14
AA1
Public Bank Berhad
9/18
AA1
YTL Corporation Berhad
4/23
AA1
Mukah Power Generation Sdn Berhad 6/18
AA2
PBFIN Berhad
6/19
AA2
Padiberas Nasional Berhad
1/14
AA3
Tanjung Bin Energy Issuer Berhad
9/17
AA3
Jimah Energy Ventures Sdn Berhad 5/18
AA3
Tanjung Bin Energy Issuer Berhad
3/19
AA3
Alliance Bank Malaysia Berhad
4/16
A2

Closing
YTM

3.96
3.76
4.53
3.73
4.20
4.33
4.85
4.36
4.68
3.64
4.90
4.31
4.40
4.50
Total

Vol
(RM
mil)
15
5
5
20
0
1
10
5
0
20
1
30
15
1
128

YTM

4.13
3.73
4.42
3.76
3.76
4.31
4.66
4.68
3.71
3.93
4.30
4.23
3.85

Previous
Trade Date
(dd/mm/yyyy)
15/11/2013
25/11/2013
20/11/2013
08/11/2013
22/08/2013
26/11/2013
01/10/2013
25/11/2013
23/08/2013
28/06/2013
16/10/2013
22/08/2013
19/09/2013

Chg
(bp)

Spread
Against
IRS**

-17
3
11
-3
44
2
19
0
-7
97
1
17
65

57
24
14
46
93
51
46
54
73
37
123
64
58
111

** spread against nearest indicative tenured IRS

Source : BPAM

On the PDS front, trading volume thinned with only over RM120m done. Trades were generally selective
with focus mainly on bank issuances and power sector credits. We saw ADCB 15 dealt at 3.96%, about 17
bps lower versus prior traded levels. SDB 14 meanwhile traded a tad more biddish at 3.73% (-3bps from
previous traded level back in early November) with RM20m changing hands. Saw some odd lots of Public
Bank 14 and 18 dealt as well.
In the power sector credits we saw Mukah Power18 traded at 4.36%, whilst TBEI17 and 19 traded at
4.90% (odd amount) and 4.40% respectively. Trades were generally quoted and dealt wider for the TBEI
tranches.

PDS Rating Actions

Issuer

PDS Description

Rating (Outlook)

Action

NongHyup Bank

RM3.3b MTN Programme (2008/2023)

AAA (Stable)

Reaffirmed

Gas Malaysia Berhad

RM500 million Al-Murabahah Medium Term

Notes (MTN) Programme
Financial Institution Ratings.

AAA (Stable)

Affirmed

A2 (Stable)

Reaffirmed

RHB Capital Berhad

RM1.1 billion CP/MTN Programme

RM150 million CP/MTN Programme

A1 (Positive)
A1 (Positive)

Reaffirmed
with positive
outlook

Gulf Investment
Corporation

Financial Institution Ratings

RM3.5 billion Sukuk Wakalah bi Istithmar
Programme (2011/2031) and RM400 million
Senior Unsecured Bonds (2008/2023)

AAA (Stable)

Reaffirmed

HwangDBS Investment
Bank Berhad's

29 November 2013
Bank Pembangunan
Malaysia Berhad

Financial Institution Ratings

RM7 billion Conventional MTN and/or Islamic
Murabahah MTN Programmes (2006/2036).

AAA (Stable)

Reaffirmed

Edaran SWM Sdn Bhd

Issuance of RM750 million (sukuk) under its

Islamic MTN Programme of up to RM1 billion in
nominal value (2012/2032).
Islamic Securities Programme of up to RM5
billion (Sukuk). Series 1 and 2

AA3 (Stable)

Reaffirmed

AAA/ AAA(s)
(Stable)

Reaffirmed

Manjung Island Energy

Berhad's

Market/Corporate News: Whats brewing

S&P justify its concerns on household debt
The credit cycle is at its best, with Malaysias economy enjoying full employment, but ratings agency Standard & Poors
(S&P) believes that as household debt continues to rise, systemic imbalances will pose a risk to financial institutions.
S&P analyst Ivan Tan pointed out that imbalances had emerged, with property prices having risen 10% year-on-year since
2010 while household income had not kept pace.
Household debt levels and housing price levels have very important implications on the ratings of the banks, as 55% of
the household debt is on mortgages and 27% of the total loans (in the financial system) is on mortgages, he told StarBiz.
He said the unemployment rate, at around 3%, was already near its lowest level, which meant that the country was already
in full employment.
What we are saying is that the credit cycle is at its best. Our outlook is for about one to two years and risk has built up in
the financial sector, and we will continue to monitor the household debt levels in relation to the gross domestic product and
look for consistent indications that the housing price escalation and consumer debt are moderating, he said.
(Source : The Star)
Islamic finance can support growth
Growth prospects of the world economy going forward is expected to remain modest for an extended time, said Bank
Negara governor Tan Sri Dr Zeti Akhtar Aziz. With the global economy on the recovery path now, Islamic finance offered
enormous potential in supporting more inclusive and sustainable economic growth, she said. Developing and emerging
economies in particular stand to reap the largest benefits from this potential, she said at the Islamic Development Bank
Prize Lecture held in Jeddah yesterday. Zeti said regulatory priorities in strengthening financial stability taking into
consideration the specifics of Islamic finance would ensure its continued resilience and its potential to effectively service
the functioning of economies and the economic wellbeing of societies. Several important lessons have emerged from this
recent global financial crisis. The first relates to the exponential expansion of the financial system which did not
commensurate with the expansion in economic activities. This has resulted in a significant disconnect between the
financial sector and its role in serving the economy. A number of factors contributed to the weakening of the link between
financial intermediation and productive economic activities, she said. She said substantial work had already been
advanced and largely completed on the development of global liquidity standards, the adoption of leverage ratios, and the
significantly strengthened capital regulations which were important components of the reform effort. Greater focus has also
been placed on strong supervision, effective resolution regimes and arrangements for the oversight of systemically
important financial institutions. While the effective implementation of these reforms is crucial, the world continues to seek
more enduring solutions that will place financial institutions firmly back in the service of society (Source : The Star)

29 November 2013
Fixed Income & Economics Research Team
Choong Yin Pheng

ChoongYP@hlbb.hongleong.com.my

Chang Wai Ming

WMChang@hlbb.hongleong.com.my

Desmond Chee Weng Luen

DesmondChee@hlbb.hongleong.com.my

Julia Tan Siew Ping

JuliaTanSP@hlbb.hongleong.com.my

Hong Leong Bank Berhad

Fixed Income & Economic Research
Global Markets
Level 6, Wisma Hong Leong
18, Jalan Perak,
50450 Kuala Lumpur.
Tel: 603 2773 0469
Fax: 603 2164 9305
Email: HLMarkets@hlbb.hongleong.com.my

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