Global Markets Research Fixed Income

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1 Global Markets Research Fixed Income Fixed Income Daily Market Snapshot Chang Wai Ming Fixed Income Strategist Hong Leong Bank Berhad, Global Markets Fixed Income & Economic Research (63) US Treasuries UST advanced sending bond yields lower on Friday, with 1- year shaved 3 bps lower to close at 2.17% level. Comments from Yellen seen assuring a more gradual approach in terms of interest rate normalization plans, whilst September remains a live month for the announcement of upcoming tapering measures which is expected to kick in relatively soon. Durable goods orders in July contracted -6.8% after a 6.4% gain in June. Expect continue range-bound trading for UST. MGS/GII Te nure 2- yr UST yr UST yr UST yr UST Te nure. Closing (%) MGS US T Closing (%) Closing (%) 3- yr yr yr yr yr yr yr GII* Local govvies stayed supported with bond yields generally range-bound. Reopening of the 7-year GII was announced with tender size coming in within our expected range, with a RM3.5b print size. All eyes on tender tomorrow. Total volume traded last Friday was over RM2.3b. With the recent rebound in local currency tracking the positive vibe from upbeat 2Q GDP release for Malaysia, we expect tomorrow s tender to be supported. PDS/Sukuk MYR IRS Levels IRS Closing (%) 1- yr yr yr yr yr Source : Bloomberg MYR corporate bonds/sukuk saw RM384m transacted, with RM1m seen changing hands for Cagamas 6/22 with levels crossed at 4.9%. Other notable trades emerging include YTLP International 6/22 and 5/27 with levels dealt at 4.49% and 4.9% level respectively. Moving down the credit curve, we saw Besraya 7/19 traded at 4.28%, whilst Affin Bank 2/22 ended at 5.3% level. Upcoming Government Bond Tenders Reopening of 7-year GII 8/24, tender size : RM3.5b (Tender date : 29 August 217) 1

2 Daily Trades : Government Bonds Securities Closing Vol Previous Previous Chg YTM (RM mil) YTM Trade Date (dd/mm/yyyy) (bp) MGS 1/ /8/217-7 MGS 2/ /8/217-2 MGS 9/ /8/217-3 MGS 1/ /8/217 5 MGS 2/ /8/217 MGS 7/ /8/217-3 MGS 3/ /8/217 MGS 8/ /8/217-2 MGS 9/ /8/217-3 MGS 3/ /8/217-1 MGS 7/ /8/217-4 MGS 9/ /8/217 MGS 9/ /8/217-2 MGS 4/ /8/217-4 MGS 11/ /8/217 1 MGS 11/ /8/217-1 MGS 4/ /8/217-3 MGS 4/ /8/217 MGS 5/ /8/217-6 MGS 4/ /8/217 MGS 3/ /8/217-1 GII 8/ /8/ GII 4/ /8/217 GII 7/ /8/217 GII 7/ /8/217-1 GII 5/ /8/217-1 GII 8/ /8/217-1 GII 9/ /8/217-4 GII 7/ /8/217 GII 9/ /8/

3 Daily Trades: PDS / Sukuk Securities Rating Closing Vol Previous Previous Chg Spread YTM (RM mil) YTM Trade Date (dd/mm/yyyy) (bp) Against IRS** Prasarana Malaysia Berhad 2/23 GG /8/ Jambatan Kedua Sdn Berhad 7/31 GG /3/ DanaInfra Nasional Berhad 3/32 GG /8/ Cagamas Berhad 6/22 AAA /8/ GENM Capital Berhad 8/25 AAA /8/ Sarawak Hidro Sdn Berhad 8/3 AAA /8/ EKVE Sdn Berhad 1/35 AAA /8/ Encorp Systembilt Sdn Berhad 11/17 AA /1/ Encorp Systembilt Sdn Berhad 5/19 AA /8/ YTL Power International Berhad 6/22 AA /8/ Public Islamic Bank Berhad 8/22 AA YTL Power International Berhad 5/27 AA /8/ First Resources Limited 12/17 AA /8/ Widad Capital Sdn Berhad 9/18 AA /6/ Kesas Sdn Berhad 1/19 AA /8/ Widad Capital Sdn Berhad 9/2 AA /6/ Tanjung Bin Energy Issuer Berhad 3/19 AA /6/ Bumitama Agri Ltd 3/19 AA /8/ Besraya (M) Sdn Berhad 7/19 AA /8/ MEX II Sdn Berhad 4/29 AA /11/ CIMB Group Holdings Berhad 5/21 A /8/ Tan Chong Motor Holdings Berhad 11/21 A /8/ Affin Bank Berhad 2/22 A /8/ Alliance Bank Malaysia Berhad 12/2 A /7/ Mah Sing - NR *spread against nearest indicative tenured IRS (Source : BPAM) Market/Corporate News: What s Brewing Westports Holdings Bhd is expected to invest up to RM1bil to double its container-handling capacity and the company will tap the bond market to partly finance this plan. Sources told StarBiz that Westports, the largest port operator in the country, was considering options from the debt market such as sukuk and other forms of borrowings to finance the expansion besides using internally-generated funds. The approval for the capacity expansion is important as Malaysia needs to prepare itself to cater to the growing need for container-handling capacity from shipping lines, said a source. The increase in Westports capacity by 24 will ensure that Port Klang keeps up with the planned consolidation and expansion of Singapore s ports in Tuas as well as maintaining its lead against other planned terminals in Indonesia. Last Friday, Westports said in a filing with Bursa Malaysia that it had secured the approval-in-principle from the Government for the expansion of its container terminal facilities (CT1 to CT19), which could handle up to 3 million twenty-foot equivalent unit (TEU) a year by 24. The proposed expansion of an additional 1 terminals is an extension of Westports current CT1 to CT9 development. The first phase of the development will be undertaken from 219 to 224. (Source : The Star) The Retirement Fund Inc (KWAP) has narrowed its options to three foreign-owned insurance companies and it is appointing an adviser on the matter, according to chief executive officer Datuk Wan Kamaruzaman Wan Ahmad. We are at the point of appointing an investment bank as our adviser... The companies are Great Eastern, Prudential and AIA," he said. KWAP, Malaysia s second-largest pension fund, also has the option to partner other institutional investors as the percentage of shares that must be owned in these insurance companies will be relatively big. It (stake acquisition) depends on valuation. We might also be looking at partnering with institutional investors but it depends because the stake is quite sizeable. We may buy smaller stakes in the companies, let s say 1% in each of the companies, he told Bernama on the sidelines of the Bumiputra Agenda Steering Unit s super series II event. Wan Kamaruzaman said KWAP would appoint an adviser to conduct the selection process on its behalf so that it would not be deeply involved in the task. KWAP will make the final decision after the process is 3

4 completed and the result of the selectionis expected to known by year-end, according to Wan Kamaruzaman. KWAP s fund size grew 2% from RM42bil in 27 to RM125bil in December 216, and of the amount, RM53.6bil resulted from increased in investment income which would be used to fund pension liabilities.bank Negara has instructed foreign insurers namely Tokio Marine Holdings Inc, AIA Group Ltd, Great Eastern Holdings Ltd and Prudential to comply with the foreign ownership rule which requires overseas insurers to increase local shareholding to at least 3%. (Source : The Star) Rating Actions Issuer PDS Description Rating/Outlook Action Nil Source: MARC and RAM ratings 4

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