AsianBondsOnline WEEKLY DEBT HIGHLIGHTS

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1 AsianBondsOnline WEEKLY October 6 asianbondsonline.adb.org Key Developments in Asian Local Currency Markets T he People s Republic of China s (PRC) gross domestic product (GDP) grew 6.7% year-on-year (y-o-y) in the third quarter (Q) of 6, the same rate as in the prior quarter. In the first 9 months of the year, GDP grew 6.7% y-o-y. By sector, agriculture grew.% y-o-y, manufacturing expanded 6.% y-o-y, and services gained 7.6% y-o-y. On a quarter-on-quarter (q-o-q) basis, GDP grew.8% in Q 6. Industrial production in the PRC grew 6.% y-o-y in September, up from 6.% y-o-y in August. The slower y-o-y growth in September was due to a slight decrease in the growth rate for manufacturing, which fell to 6.% y-o-y from 6.8% y-o-y in August. In its Board of Governors meeting held on 9 October, Bank Indonesia decided to lower its 7-day reverse repo rate by basis points (bps) to.7%. The central bank has lowered the 7-day reverse repo rate by a cumulative bps since it switched to using this rate as its policy rate in August. The deposit facility rate and lending facility rate were reduced by bps each to.% and.%, respectively. Consumer price inflation in Hong Kong, China eased to.7% y-o-y in September from.% y-o-y in August. The decline in inflation was due largely to a low base effect resulting from the government s one-off relief measure for public housing tenants in August. In Malaysia, consumer price inflation remained unchanged in September from the previous month at.% y-o-y. The prices of food and nonalcoholic beverages, which account for almost a third of the Consumer Price Index, posted a smaller annual increase of.% y-o-y in September compared with.% y-o-y in August. The Producer Price Index in the Republic of Korea fell.% y-o-y but rose.% month-onmonth in September, according to the latest report of the Bank of Korea released last week. The decline was spurred by y-o-y decreases in product prices in the manufacturing and utility sectors. Overseas Filipino workers personal remittances to the Philippines rebounded in August, surging 6.% y-o-y following a.% y-o-y contraction in July, per the latest remittance data from the Bangko Sentral ng Pilipinas released last week. Between July and August, personal remittances increased from USD. billion to USD.6 billion, with the cumulative total for January August reaching USD9. billion. Asia Bond Monitor September 6 read more -Year Selected LCY Government Security Yields Close of October 6 basis point change from Markets Latest Closing Previous Day* Previous Week* -Jan-6* US EU Japan PRC Hong Kong, China India Indonesia Korea, Rep. of Malaysia Philippines Singapore Viet Nam Selected Government Security Yields Benchmark Yield Curves - Local Currency Government Bonds -versus- Yield Spread Chart Policy Rate versus Charts Credit Default Swap Spreads & Exchange Rate Indexes Selected Debt Security Issuances Selected Asia Data Releases BDO Unibank in the Philippines priced USD million worth of - year fixed-rate senior notes on a.6% coupon last week, the lowest rate on record for a USD-denominated bond from a Philippine issuer. The issuance is part of the bank s Medium-Term Note Program. Asian investors bought 87% of the total, while the remaining % went to European investors. The bonds were rated Baa by Moody s Investors Service. For the past week, local currency government bond yields rose for all tenors in the Republic of Korea and for most tenors in Indonesia and the Philippines. On the other hand, bonds yields were mostly down in the People s Republic of China; Malaysia, and Viet Nam. Bond yields were mixed in Singapore and Hong Kong, China. The -year versus -year yield spread narrowed for all emerging East Asian markets except Indonesia and the Republic of Korea.....

2 ..... Summary Text of News Articles The PRC s GDP Growth Rate Remains Unchanged in Q 6; The PRC s Industrial Production Growth Slows in September The People s Republic of China s (PRC) gross domestic product (GDP) grew 6.7% year-on-year (y-o-y) in the third quarter (Q) of 6, the same rate as in the prior quarter. In the first 9 months of the year, GDP grew 6.7% y-o-y. By sector, agriculture grew.% y-o-y, manufacturing expanded 6.% y-o-y, and services gained 7.6% y-o-y. On a quarter-on-quarter (q-o-q) basis, GDP grew.8% in Q 6. Industrial production in the PRC grew 6.% y-o-y in September, down from 6.% y-o-y in August. The slower y-o-y growth in September was due to a slight decrease in the manufacturing industry s growth rate, which fell to 6.% y-o-y from 6.8% y-o-y in August. Mining and quarrying, however, rose.% y-o-y in September after falling.% y-o-y in August. The production and distribution of electricity, heating power, gas, and water increased 7.% y-o-y in September after rising 7.% y-o-y in August. Bank Indonesia Cuts 7-Day Repo Rate by bps to.7% In its Board of Governors meeting held on 9 October, Bank Indonesia decided to lower the 7-day reverse repurchase (repo) rate by basis points (bps) to.7%. The central bank has lowered the 7-day reverse repo rate by a cumulative bps since it switched to using this rate as its policy rate in August. The deposit facility rate and lending facility rate were reduced by bps each to.% and.%, respectively. Bank Indonesia s monetary easing move is expected to stimulate domestic demand and credit expansion to help boost economic growth. For full-year 6, Bank Indonesia projects the economy to grow at the lower-end of its forecast of.9%.%. For policy rate trends in Indonesia, refer to this link: Hong Kong, China s Consumer Price Inflation Falls in September; Consumer Price Inflation in Malaysia Remains Unchanged in September Consumer price inflation in Hong Kong, China eased to.7% y-o-y in September from.% y-o-y in August. The decline in inflation was due largely to a low base effect resulting from the government s one-off relief measure for public housing tenants in August. Netting out the impact of the one-off relief measure, inflation rose.% in August. The largest price increase in September came from the utilities sector, which rose.% y-o-y. Housing costs rose.% y- o-y and the cost of meals bought away from home rose.9% y-o-y. The government said it does not expect significant inflationary pressures given low global inflation and contained domestic costs. Consumer price inflation in Malaysia remained unchanged from the previous month at.% y-o-y in September. The prices of food and nonalcoholic beverages, which account for almost a third of the Consumer Price Index, posted a smaller annual increase of.% y-o-y in September compared with.% y-o-y in August. The transport index posted a slower annual decline of.% y-o-y in September compared with 6.7% y-o-y in August. On a month-on-month (m-o-m) basis, consumer prices fell.% in September after an increase of.% in August. The Republic of Korea s PPI Rises.% m-o-m, Falls.% y-o-y in September The Producer Price Index (PPI) in the Republic of Korea fell.% y-o-y but rose.% m-o-m in September, according to the latest PPI report of the Bank of Korea released last week. The PPI s y-o-y decline in September spurred by decreases in the manufacturing and utility sectors was smaller than August s.8% y-o-y drop. The PPI s m-o-m hike in September which was buttressed by increases in the agricultural, forestry, and marine and services sectors was up from the previous month s.% m-o-m rise

3 ..... Summary Text of News Articles OFW Remittances to the Philippines Surge in August Overseas Filipino workers (OFW) personal remittances to the Philippines rebounded in August as growth surged to 6.% y-o-y following a.% y-o-y contraction in July, per the latest remittance data from the Bangko Sentral ng Pilipinas released last week. Between July and August, OFW personal remittances increased from USD. billion to USD.6 billion. Over the January August period, OFW personal remittances stood at USD9. billion, up.% on a y- o-y basis. BDO Unibank Sells USD Million -Year Bond BDO Unibank in the Philippines priced USD million worth of -year US fixed-rate senior notes on a.6% coupon last week, the lowest rate on record for a USD-denominated bond from a Philippine issuer. The issuance is part of the bank s Medium-Term Note Program. Asian investors bought 87% of the total and the remaining % went to European investors. The bond was rated Baa by Moody s Investors Service. The bank will use the bond s proceeds to refinance its US$ million worth of outstanding bonds maturing in February 7 and effectively support its USD-denominated projects....

4 Selected Government Security Yields -Month Selected LCY Government Security Yields Markets Close of October 6 Latest Closing Previous Day* basis point change from Previous Week* -Jan-6* US EU Japan PRC Hong Kong, China India Korea, Rep. of Malaysia Philippines Singapore Markets Close of October 6 -Year Selected LCY Government Bond Yields Latest Closing Previous Day* basis point change from Previous Week* -Jan-6* US EU Japan PRC Hong Kong, China India Indonesia Korea, Rep. of Malaysia Philippines Singapore Viet Nam EU = European Union, LCY =local currency, PRC = People s Republic of China, US = United States. Source: Based on data from Bloomberg, LP.

5 asianbondsonline.adb.org Benchmark Yield Curves LCY Government Bonds. US.7 EU.8 Japan China, People s Rep. of. Hong Kong, China 8. Indonesia Korea, Republic of. Malaysia. Philippines Singapore. 8. Viet Nam EU = European Union, LCY = local currency US = United States. Source: Based on data from Bloomberg.

6 - versus - Year Yield Spread Chart US EU Japan China, People's Rep. of -Oct-6 -Oct-6 7-Oct-6 Hong Kong, China Indonesia Korea, Rep. of Malaysia Philippines Singapore Viet Nam 7 7 basis points EU = European Union, US = United States. Source: Based on data from Bloomberg LP. 6

7 Policy Rate versus China, People s Rep. of Hong Kong, China Indonesia year Lending Rate..9 HKMA Base Rate day Reverse Repo Rate.7.7 The PRC uses the -year lending rate as one of its policy rates. The Hong Kong Monetary Authority maintains a Discount Window Base Rate. Bank Indonesia shifted its policy rate to the 7-day reverse repo rate effective 9 August 6. Source: Bloomberg, LP. Korea, Republic of Malaysia Philippines Overnight Reverse Repo Rate 7-day Repo Rate c Overnight Policy Rate The Bank of Korea shifted its policy rate from the overnight repurchase (repo) rate to the 7-day repo rate in March 8. Bank Negara Malaysia uses the overnight policy rate (OPR) as its policy rate. Bangko Sentral uses the Philippine overnight reverse repurchase agreement rate as one of its policy instruments. 8 Viet Nam -day Repo Rate 6.. Refinancing Rate The Bank of replaced the -day repurchase rate with the -day repurchase rate in January 7 as its policy rate. The State Bank of Viet Nam uses a benchmark prime lending rate as its policy rate. 7

8 Mid spread in basis points asianbondsonline.adb.org Credit Default Swap Spreads and Exchange Rate Indexes Credit Default Swap Spreads Senior -Year* China, People's Rep. of Indonesia Korea, Rep. of Japan Malaysia Philippines Viet Nam Jan- May- Sep- Jan- May- Sep- Jan- May- Sep- Jan-6 Jun-6 Oct-6 * In USD and based on sovereign bonds Source: Bloomberg Exchange Rate Indexes (vis-à-vis USD, January 7=) China, People's Rep. of Indonesia Korea, Rep. of Malaysia Philippines 9 9 Singapore 8 8 Viet Nam Invisible Source: AsianBondsOnline calculations based on Bloomberg data. Jan- May- Sep- Jan- May- Sep- Jan- May- Sep- Jan-6 Jun-6 Oct-6 8

9 Selected Debt Security Issuances (7 October 6) Auction Average Coupon Amount Offered Amount Issued Markets Date Type of Security (%) (LCY billion) (LCY billion) CN 9-Oct -year Treasury Bonds HK 8-Oct 9-day Exchange Fund Bills day Exchange Fund Bills ID 8-Oct 6-month Islamic Treasury Bills 6.,. -year Treasury Bonds 6.8.,. -year Treasury Bonds 7.. -year Treasury Bonds JP 8-Oct -year Treasury Discount Bills -.,., month Treasury Discount Bills -.,.,79.97 KR 7-Oct 9-day Monetary Stabilization Bonds.,.,. 8-day Monetary Stabilization Bonds year Korea Treasury Bonds.6.88,.,. 9-Oct -year Monetary Stabilization Bonds.6.,.,. PH 7-Oct 9-day Treasury Bills day Treasury Bills day Treasury Bills SG 8-Oct 8-day MAS Bills day MAS Bills... -Oct 68-day MAS Bills.6.. TH 7-Oct 8-day Treasury Bills... 8-Oct 8-day Bank of Bonds... 9-day Bank of Bonds day Bank of Bonds Oct 9.69-year Government Bonds Oct -day Bank of Bonds...8 -Oct 8-day Treasury Bills... VN 9-Oct -year Treasury Bonds 6.,.,. -year Treasury Bonds 7.,.,. -year Treasury Bonds 7.7,. 77. LCY = local currency, MAS = Monetary Authority of Singapore. Sources: Local market sources and Bloomberg, LP. 9

10 Selected Asia Data Releases ( October 6) Economy and Variable Release Date Historical Data Recent Trends Korea, Rep. of / Q :.% Real gross domestic product (GDP) grow th in the Republic of Korea accelerated to GDP preliminary Q :.8%.% year-on-year (y-o-y) in the second quarter (Q) of 6 from.8% y-o-y in the Q 6:.8% first quarter (Q) 6 due to stronger annual grow th in household spending, domestic Q 6 Q 6:.% investment, exports, construction, manufacturing, and services. Singapore /6 8/:.7% Singapore s industrial production expanded.% y-o-y in August after contracting Industrial Production 9/: 6.%.% y-o-y in July. 7/6:.% SEP 8/6:.% Hong Kong, China /7 8/: 6.% Merchandise exports from Hong Kong, China rose.8% y-o-y in August after falling Exports 9/:.6%.% y-o-y in July. 7/6:.% SEP 8/6:.8% Hong Kong, China /7 8/: 7.% Hong Kong, China s imports climbed.8% y-o-y in August follow ing a.% y-o-y Imports 9/: 7.6% decline in July. 7/6:.% SEP 8/6:.8% Japan /8 8/:.% The Consumer Price Index (CPI) in Japan fell.% y-o-y in August after a decline of CPI 9/:.%.% y-o-y in July. 7/6:.% SEP 8/6:.% Japan / 8/:.9% Industrial production in Japan rose.% y-o-y in August, a reversal from the decline of Industrial Production 9/:.%.% y-o-y in July. 7/6:.% SEP 8/6:.% Korea, Rep. of / 8/:.8% Industrial production grow th in the Republic of Korea quickened to.% y-o-y in Industrial Production 9/:.% August from.6% y-o-y in July, buoyed by stronger manufacturing production. 7/6:.6% SEP 8/6:.% / 8/:,67 s current account surplus w idened to USD.8 billion in August from USD.6 Current Account 9/:, billion in July. USD million 7/6:,7 SEP 8/6:,8 / 8/:.% s exports grew.8% y-o-y in August after contracting.% y-o-y in July. Exports 9/:.% 7/6:.% SEP 8/6:.8% Viet Nam / to / 9/: 9.6% Export grow th in Viet Nam slow ed to 6.7% y-o-y in the first 9 months of the year from Exports YTD /: 8.% 9.6% y-o-y in the same period a year earlier. 8/6:.% OCT 9/6: 6.7% Viet Nam / to / 9/:.% Industrial production grow th in Viet Nam climbed 7.6% y-o-y in September, up from 7.% y-o-y in August. Industrial Production /: 8.8% 8/6: 7.% OCT 9/6: 7.6% Source: AsianBondsOnline, Bloomberg LP, and Reuters.

11 News Articles: Sources for Further Reading Tip: Click on link to open a new browser (Acrobat Reader 8); for older versions right-click to open a new browser) The PRC s GDP Growth Rate Remains Unchanged in Q 6; The PRC s Industrial Production Growth Slows in September National Economy Grew Steadily with Progress Made and Quality Improved in the First Three Quarters of 6 Census and Statistics Bureau (9 October 6) Industrial Production Operation in September 6 Census and Statistics Bureau ( October 6) Industrial Production Operation in August 6 Census and Statistics Bureau ( September 6) Bank Indonesia Cuts 7-Day Repo Rate by bps to.7% Macroeconomic Stability Maintained, BI Cuts 7-Day (Reverse) Repo Rate from.% to.7% Bank Indonesia ( October 6) Hong Kong, China s Consumer Price Inflation Falls in September; Consumer Price Inflation in Malaysia Remains Unchanged in September Consumer Price Indices for September 6 [ Oct 6] Census and Statistics Department ( October 6) Consumer Price Index Malaysia September 6 Department of Statistics ( October 6) The Republic of Korea s PPI Rises.% m-o-m, Falls.% y-o-y in September The Producer Price Index during September 6 The Bank of Korea (9 October 6) OFW Remittances to the Philippines Surge in August Personal Remittances Climb to US$9. Billion in the First Eight Months of 6 Bangko Sentral ng Pilipinas (7 October 6) BDO Unibank Sells USD Million -Year Bond BDO issues USD million Senior Notes BDO Unibank (8 October 6) BDO defies Philippines CDS with tight bond FinanceAsia (8 October 6) Disclaimer: AsianBondsOnline Newsletter is available to users free of charge. ADB provides no warranty or undertaking of any kind with respect to the information and materials found on, or linked to, the AsianBondsOnline Newsletter. ADB accepts no responsibility for the accuracy of the material posted or linked to in the publication, or the information contained therein, or for any consequences arising from its use, and does not invite or accept reliance being placed on any material or information so provided. Views expressed in articles marked with AsianBondsOnline are those of the authors and not ADB. This disclaimer does not derogate from, and is in addition to, the general terms and conditions regarding the use of the AsianBondsOnline website, which also apply.