23 September 2013 asianbondsonline.adb.org ……………………………………………………………………………………………………………..……………..…… Key Developments in Asian Local Currency Markets 1 he United States (US) Federal Open Market Committee (FOMC) decided last week to maintain its asset purchase program at its current pace of monthly purchases of longer-term Treasury securities and agency mortgage-backed securities amounting to US$45 billion and US$40 billion, respectively. It also decided to maintain the target range for the federal funds rate at between zero and 0.25%. Economic projections from FOMC's 17-18 September meetings reflected continued expectations of moderate economic growth that will gradually pick up as well as gradual progress toward inflation and unemployment rates consistent with the Federal Reserve's mandate to foster price stability and maximum employment. Consumer price inflation in Malaysia moderated to 1.9% year-on-year (y-o-y) in August from 2.0% in July. Producer prices in the Republic of Korea fell 1.3% y-o-y in August following a 1.0% drop in July. Japan's merchandise trade deficit widened to JPY960.3 billion in August from JPY768.4 billion a year ago, as exports of goods increased 14.7% y-o-y to JPY5.8 trillion, while merchandise imports surged 16.0% y-o-y to JPY6.7 trillion. In the Philippines, personal remittances from overseas Filipinos rose 6.4% y-o-y to US$13.9 billion for the January-July period, while the balance of payments (BOP) surplus widened on an annual basis to US$1 billion in 2Q13 from US$73 million in 2Q12. Singapore's non-oil domestic exports (NODX) fell 6.2% y-o-y in August following a 1.9% drop in July. Thailand's Bank for Agriculture and Agricultural Cooperatives (BAAC) auctioned THB5 billion worth of 2-year bonds with a 3.3% coupon and THB7 billion of 5-year bonds with a 4.015% coupon. SK Global Chemical Company based in the Republic of Korea raised CNH950 million from pricing a 3-year bond in Hong Kong, China at a coupon rate of 4.125%. The Indonesian government announced last week details of its planned retail bond sale beginning 20 September through 4 October. The bonds will carry a maturity of 3 years and a coupon rate of 8.5%. Greentown China Holdings issued a 5.5- year bond worth US$300 million at a coupon rate of 8.0% last week. Korea Eximbank raised US$1 billion from a dual-tranche bond sale last week, with the bonds comprising a US$500 million 5-year fixed-rate note offering a 2.875% coupon and a US$500 million 3-year floating- rate note priced at par at a spread of 85 basis points over 3-month Libor. Fitch Ratings (Thailand) reported last week that it had assigned an A+(tha) National Long-Term Rating on the secured bonds of CP ALL Public Company Limited, a retail firm based in Thailand. Meanwhile, Moody's assigned a Ba3 (hyb) rating to Metropolitan Bank & Trust Company's (Metrobank) proposed Tier 2 capital notes issuance. Metrobank is a Philippine-based commercial bank. Last week, government bond yields fell for all tenors in Indonesia, the Republic of Korea, and Malaysia, and for most maturities in Hong Kong, China; the Philippines; Singapore; Thailand; and Viet Nam. Yield movements were mixed in the People's Republic of China (PRC). Yield spreads between 2- and 10-year tenors widened in the PRC and Viet Nam and narrowed in Hong Kong, China; Indonesia; the Republic of Korea; Malaysia; the Philippines; Singapore; and Thailand. The upcoming issue of the Asia Bond Monitor (ABM) will be released on 26 September and available for download on the AsianBondsOnline website. T Asia Bond Monitor June 2013 read more 10-Year Selected LCY Government Security Yields Close of 20 September 2013 basis point change from Markets Latest Closing Previous Day* Previous Week* 1-Jan- Selected Government Security Yields Benchmark Yield Curves - Local Currency Government Bonds Policy Rate versus Inflation Rate Charts Credit Default Swap Spreads & Exchange Rate Indexes Selected Debt Security Issuances Selected Asia Data Releases 2-versus-10 Yield Spread Chart US 2.73 -1.82 -15.09 97.63 EU 1.94 2.20 -3.30 62.70 Japan 0.70 1.70 -3.30 -9.60 PRC 4.14 0.00 0.00 55.00 Hong Kong, China 2.13 0.00 -22.40 153.20 India 8.56 36.60 6.00 56.20 Indonesia 7.87 -2.20 -47.60 268.60 Korea, Rep. of 3.47 0.00 -10.00 31.00 Malaysia 3.67 -0.40 -10.30 16.70 Philippines 3.41 4.16 -2.43 -74.36 Singapore 2.24 9.00 -33.00 94.00 Thailand 3.98 -2.30 -37.70 46.90 Viet Nam 9.50 0.00 0.00 -70.00 -15.09 -3.30 -3.30 0.00 -22.40 6.00 -47.60 -10.00 -10.30 -2.43 -33.00 -37.70 0.00
he United States (US) Federal Open Market Committee (FOMC) decided last week to maintain its asset purchase program at its current pace of monthly purchases of longer-term Treasury securities and agency mortgage-backed securities amounting to US$45 billion and US$40 billion, respectively. It also decided to maintain the target range for the federal funds rate at between zero and 0.25%. Economic projections from
FOMC's 17-18 September meetings reflected continued expectations of moderate economic growth that will gradually pick up as well as gradual progress toward inflation and unemployment rates consistent with the Federal Reserve's mandate to foster price stability and maximum employment.
Consumer price inflation in Malaysia moderated to 1.9% year-on-year (y-o-y) in August from 2.0% in July. Producer prices in the Republic of Korea fell 1.3% y-o-y in August following a 1.0% drop in July.
Japan's merchandise trade deficit widened to JPY960.3 billion in August from JPY768.4 billion a year ago, as exports of goods increased 14.7% y-o-y to JPY5.8 trillion, while merchandise imports surged 16.0% y-o-y to JPY6.7 trillion. In the Philippines, personal remittances from overseas Filipinos rose 6.4% y-o-y to US$13.9 billion for the January-July period, while the balance of payments (BOP) surplus widened on an annual basis to US$1 billion in 2Q13 from US$73 million in 2Q12. Singapore's non-oil domestic exports (NODX) fell 6.2% y-o-y in August following a 1.9% drop in July.
Thailand's Bank for Agriculture and Agricultural Cooperatives (BAAC) auctioned THB5 billion worth of 2-year bonds with a 3.3% coupon and THB7 billion of 5-year bonds with a 4.015% coupon. SK Global Chemical Company based in the Republic of Korea raised CNH950 million from pricing a 3-year bond in Hong Kong, China at a coupon rate of 4.125%. The Indonesian government announced last week details of its planned retail bond sale beginning 20 September through 4 October. The bonds will carry a maturity of 3 years and a coupon rate of 8.5%.
Greentown China Holdings issued a 5.5-year bond worth US$300 million at a coupon rate of 8.0% last week. Korea Eximbank raised US$1 billion from a dual-tranche bond sale last week, with the bonds comprising a US$500 million 5-year fixed-rate note offering a 2.875% coupon and a US$500 million 3-year floating-rate note priced at par at a spread of 85 basis points over 3-month Libor.
Fitch Ratings (Thailand) reported last week that it had assigned an A+(tha) National Long-Term Rating on the secured bonds of CP ALL Public Company Limited, a retail firm based in Thailand. Meanwhile, Moody's assigned a Ba3 (hyb) rating to Metropolitan Bank & Trust Company's (Metrobank) proposed Tier 2 capital notes issuance. Metrobank is a Philippine-based commercial bank.
Last week, government bond yields fell for all tenors in Indonesia, the Republic of Korea, and Malaysia, and for most maturities in Hong Kong, China; the Philippines; Singapore; Thailand; and Viet Nam. Yield movements were mixed in the People's Republic of China (PRC). Yield spreads between 2- and 10-year tenors widened in the PRC and Viet Nam and narrowed in Hong Kong, China; Indonesia; the Republic of Korea; Malaysia; the Philippines; Singapore; and Thailand.
The upcoming issue of the Asia Bond Monitor (ABM) will be released on 26 September and available for download on the AsianBondsOnline website.
TAsia Bond Monitor June 2013 read more
10-Year Selected LCY Government Security Yields Close of 20 September 2013 basis point change from
US Federal Reserve Maintains Pace of Asset Purchase Program, Releases Economic Projections ....................................................................................................................... The United States (US) Federal Open Market Committee (FOMC) announced on 18 September that it would maintain the pace of its asset purchase program comprising monthly purchases of longer-term Treasury securities and agency mortgage-backed securities amounting to US$45 billion and US$40 billion, respectively. It also decided to maintain the target range for the federal funds rate at between zero and 0.25%. During FOMC's 17-18 September meetings, Federal Reserve Board members and Federal Reserve Bank presidents gave their projections for the US economy that included continued expectations of (i) moderate economic growth that will gradually pick up as well as (ii) gradual progress toward inflation and unemployment rates consistent with the Federal Reserve's mandate to foster price stability and maximum employment.
Consumer Price Inflation Moderates in Malaysia in August; Producer Prices in the Republic of Korea Fall in August .......................................................................................................................
In Malaysia, consumer price inflation eased to 1.9% year-on-year (y-o-y) in August from 2.0% in July due to slower increases in the prices of food and non-alcoholic beverages. The price index for food and non-alcoholic beverages inched up 3.6% y-o-y, while non-food prices increased 1.1% y-o-y for the month. Within the food and non-alcoholic beverages component, declines were seen in the costs of clothing and footwear; communications; and recreation, services, and culture.
In the Republic of Korea, the producer price index (PPI) fell 1.3% y-o-y in August following a 1.0% drop in July, based on data from The Bank of Korea. The y-o-y decline in the PPI in August arose mainly from a 2.5% fall in producer prices for manufacturing industry products and a 4.6% decrease in producer prices for agricultural, forestry, and marine products. Between July and August, however, the PPI rose 0.3%.
For inflation rate trends in Malaysia, refer to this link: http://asianbondsonline.adb.org/regional/data/marketwatch.php?code=policy_rate_and_inflation_trends
Japan's Merchandise Trade Deficit Widens in August; Singapore's NODX Drops in August; Remittances to the Philippines Rise in January-July; Philippine BOP Surplus Widens in 2Q13 .......................................................................................................................
Japan's trade deficit widened to JPY960.3 billion in August from JPY768.4 billion a year earlier. Exports of goods increased 14.7% y-o-y to JPY5.8 trillion, while imported goods increased 16.0% y-o-y to JPY6.7 trillion. The y-o-y increase in exports reflected continued improvement in exports to the US and a rebound in shipments to the People's Republic of China (PRC) following diplomatic disputes last year.
Singapore's non-oil domestic exports (NODX) fell 6.2% y-o-y in August, following a 1.9% drop in July, as electronic and non-electronic NODX were down 9.2% and 4.7%, respectively. On a y-o-y basis, NODX decreased in eight of the 10 largest NODX markets, with the two exceptions being the PRC and Hong Kong, China. On a month-on-month (m-o-m) and seasonally-adjusted basis, NODX contracted 6.0% in August following a 1.8% drop in July, again led by decreases in both electronic and non-electronic NODX. The country's seasonally-adjusted NODX stood at SGD13.5 billion in August, lower than the SGD14.4 billion posted in July.
Personal remittances from overseas Filipinos rose 6.4% y-o-y in January-July to reach US$13.9 billion, driven by an increase in remittances from land-based overseas workers with contracts of 1 year or longer, who account for 75% of all overseas Filipino remittances. The United US, Saudi Arabia, United Kingdom (UK), United Arab Emirates (UAE), Singapore, Canada, and Japan remained the top sources of cash remittances. In July, remittances rose 7.4% y-o-y to reach US$2.1 billion.
The Philippines' balance of payment (BOP) surplus surged on an annual basis to US$1 billion in 2Q13 from US$73 million in 2Q12. This was mainly due to a higher current account surplus and a reversal in the financial account from net outflows to net inflows. The current account surplus for 2Q13 rose to US$2.5 billion as the increase in net receipts from secondary income and services outweighed the trade deficit and primary income outflows. The financial account also
Japan's Merchandise Trade Deficit Widens in August; Singapore's NODX Drops in August; Remittances to the Philippines Rise in January-July; Philippine BOP Surplus Widens in 2Q13 (cont…) .......................................................................................................................
recorded net inflows of US$127 million in 2Q13 from net outflows of US$722 million in 2Q12. Meanwhile, on a quarterly basis, net receipts in the capital account decreased to US$24 million in 2Q13 from US$30 million in 2Q12, and net outflows from unclassified items increased to US$1.6 billion in 2Q13 from US$1.5 billion in 2Q12. The surge in the BOP surplus resulted in a 6.7% y-o-y increase in the Philippines' gross international reserves to US$81.3 billion at end-June 2013.
Thailand's BAAC Raises THB12 Billion from Dual-Bond Sale; SK Global Prices CNH950 Million 3-Year Bond;
Indonesian Government Plans Sale of 10th Series of Retail Bonds ....................................................................................................................... Last week, Thailand's Bank for Agriculture and Agricultural Cooperatives (BAAC) auctioned THB5 billion worth of 2-year bonds at a coupon rate of 3.3% and THB7 billion worth of 5-year bonds carrying a coupon of 4.015%.
SK Global Chemical Company based in the Republic of Korea raised CNH950 million from pricing a 3-year bond in Hong Kong, China at a coupon rate of 4.125%. The bond was priced through the company's wholly owned investment vehicle in Hong Kong, China. Asia-based investors accounted for 98% of the deal while the rest went to European investors. By investor type, asset and fund managers garnered 85% of the total while the remainder was purchased by banks.
Last week, the Indonesian government announced details of its planned retail bond sale, which will be offered beginning 20 September through 4 October. This planned retail bond sale is Indonesia's 10th series of retail bonds. The bonds will have a maturity of 3 years and carry a coupon of 8.5%. The government has appointed 20 selling agents for the issue, which includes 17 banks and 3 securities firm.
Greentown China Holdings Issues US$300 Million 5.5-Year Bond; Korea Eximbank Raises US$1 Billion from Dual-Tranche Bond Sale .......................................................................................................................
Greentown China Holdings issued a 5.5-year US$300 million bond at a coupon of 8.0%. The bond is rated B1 and BB by Moody's and Standard & Poor's, respectively. Demand for the bond was strong with orders of US$5.5 billion. Fund managers purchased 61% of the bonds, 16% went to private banks and 21% to corporates and others.
Korea Eximbank raised US$1 billion from a dual-tranche bond sale last week. The bonds comprised a US$500 million 5-year fixed-rate bond offering a 2.875% coupon and a US$500 million 3-year floating-rate note (FRN) priced at par at a spread of 85 basis points over 3-month Libor. For the fixed-rate bond, 48% went to investors in Asia, 42% to US investors, and 10% to European investors, while fund managers and insurance companies were the largest investor group purchasing 49% of the total. Meanwhile, 50% of the FRN went to investors in the US, 31% to Asia, and 19% to Europe. Fund managers and insurance companies bought the largest share at 43%.
Fitch Ratings Assigns A+(tha) Rating to CP ALL's Secured Bonds; Moody's Assigns Ba3 (hyb) Rating to Metrobank's Proposed Tier 2 Capital Notes Issuance .......................................................................................................................
Fitch Ratings (Thailand) reported last week that it had assigned an A+(tha) National Long-Term Rating on secured bonds of CP ALL Public Company Limited, a retail firm based in Thailand. The bonds, which will amount to THB40 billion, will be secured by shares of Siam Makro Public Company Limited held by CP ALL and will be issued in eight tranches that mature in 2016, 2018, 2020, and 2023.
Moody's has assigned a Ba3 (hyb) rating to Metropolitan Bank & Trust Company's (Metrobank) proposed Tier 2 capital notes issuance. Metrobank is the first Philippine bank to obtain a Moody's rating on its Basel III-compliant Tier 2 capital. In a disclosure to the Philippine Stock Exchange (PSE), Metrobank announced that it will conduct a series of international investor meetings to be arranged by JP Morgan Securities and UBS AG (Hong Kong, China branch).
Tip: Zoom-in on the table using the Acrobat zoom tool Selected Asia Data Releases (24 – 30 September 2013)
Economy and Variable Release Date Historical Data Recent Trends
Hong Kong, China 1Q12: 5.3Current Account 2Q12: –6.8HKD billion 4Q12: 17.12Q13 1Q13: –1.3Viet Nam 08/12: 5.0%CPI 09/12: 6.5%y-o-y, % 07/13: 7.3%SEP 08/13: 7.5%Philippines 06/12: –789Trade Balance 07/12: –320US$ million 05/13: –365JUL 06/13: –370Viet Nam 08/12: 4.4%Industrial Production 09/12: 9.7%y-o-y, % 07/13: 7.0%SEP 08/13: 4.4%Viet Nam 08/12: 51.0Trade Balance 09/12: 175.0US$ million 07/13: 378.9SEP 08/13: –300.0Singapore 07/12: 2.2%Industrial Production 08/12: –2.8%y-o-y, % 06/13: –4.2%AUG 07/13: 2.7%Japan 07/12: –0.4%CPI 08/12: –0.4%y-o-y, % 06/13: 0.2%AUG 07/13: 0.7%Republic of Korea 07/12: 6,144.3Current Account 08/12: 2,504.3US$ million 06/13: 7,237.3AUG 07/13: 6,771.2Thailand 07/12: –5.72%Manufacturing Production Index 08/12: –11.30%y-o-y, % 06/13: –3.24%AUG 07/13: –4.54%Japan 07/12: 0.1%Industrial Production 08/12: –4.1%y-o-y, % 06/13: –4.6%AUG 07/13: 1.8%Republic of Korea 07/12: –0.28%Industrial Production 08/12: –2.07%y-o-y, % 06/13: –2.48%AUG 07/13: 0.90%Thailand 07/12: 112Current Account 08/12: 573US$ billion 06/13: –664AUG 07/13: –709
Source: AsianBondsOnline , Bloomberg LP, and Reuters.
09/30 Japan’s industrial production rose 1.8% y-o-y in July follow ing a decrease of 4.6% in June.
09/30 Industrial production in the Republic of Korea grew 0.9% y-o-y in July follow ing a2.5% contraction in June.
09/30 Thailand’s current account deficit w idened from US$664 million in June to US$709million, driven mainly by a monthly drop in the merchandise trade surplus.
09/25 Viet Nam’s industrial production slow ed to 4.4% y-o-y in August from 7.0% in July.
09/25 Viet Nam incurred a US$300.0 million trade deficit in August follow ing a US$378.9million trade surplus in July.
09/27 Thailand’s manufacturing production index slid for the fourth consecutive month inJuly, falling 4.5% y-o-y.
09/26 Singapore’s industrial production increased 2.7% y-o-y in August, reversing a4.2% contraction in the previous month.
09/27 Consumer price inflation in Japan rose slightly to 0.7% y-o-y in July from 0.2% inJune.
09/27 The current account surplus of the Republic of Korea narrow ed from US$7.2billion in June to US$6.8 billion in July, partly due to a fall in the surplus of theservices and primary income accounts, as w ell as a reversal from a surplus to adeficit in the secondary income account.
Hong Kong, China recorded a current account deficit of HKD1.3 billion in 1Q13after posting a surplus of HKD17.1 billion in the previous quarter.
Consumer price inflation in Viet Nam accelerated to 7.5% year-on-year (y-o-y) inAugust, the highest level since May 2012.
09/24
09/24
09/25 The Philippines posted a trade deficit of US$370 million in June, up slightly fromUS$365 million in May.
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News Articles: Sources for Further Reading
US Federal Reserve Maintains Pace of Asset Purchase Program,
Releases Economic Projections
Federal Reserve Issues Formal Statement
Federal Reserve (18 September 2013)
Transcript of Chairman Bernanke’s Press Conference Opening
Remarks
Federal Reserve (18 September 2013)
Economic Projections of Federal Reserve Board Members and
Federal Reserve Bank Presidents, September 2013
Federal Reserve (18 September 2013)
Consumer Price Inflation Moderates in Malaysia in August;
Producer Prices in the Republic of Korea Fall in August
Consumer Price Index Malaysia August 2013
Department of Statistics Malaysia (18 September 2013)
Producer Price Index during August 2013
The Bank of Korea (17 September 2013)
Japan’s Merchandise Trade Deficit Widens in August;
Singapore’s NODX Drops in August; Remittances to the
Philippines Rise in January–July; Philippine BOP Surplus
Widens in 2Q13
Value of Exports and Imports August 2013 (Provisional)
Ministry of Finance (19 September 2013)
Japan Export Gains Offer Growth Momentum as Sales-Tax
Rise Looms
Bloomberg (19 September 2013)
SINGAPORE'S EXTERNAL TRADE – August 2013
International Enterprise Singapore (17 September 2013)
Personal Remittances Continue to Rise, July Inflows Exceed
US$2 Billion for the Fourth Consecutive Month
Bangko Sentral ng Pilipinas (16 September 2013)
Strong Current and Financial Accounts Boost BOP Surplus in
Q2 2013
Bangko Sentral ng Pilipinas (20 September 2013)
Thailand’s BAAC Raises THB12 Billion from Dual-Bond Sale;
SK Global Prices CNH950 Million 3-Year Bond; Indonesian
Government Plans Sale of 10th Series of Retail Bonds
BAAC’s Bond Auction Result
ThaiBMA (19 September 2013)
SK Global prices first Korean dim sum bonds in 2013
The Asset (17 September 2013)
Rencana Penjualan Obligasi Negara Ritel (ORI) Seri ORI010
(in Bahasa Indonesia)
Indonesia Debt Management Office (18 September 2013)
Bank Greentown China Holdings Issues US$300 Million 5.5-Year
Bond; Korea Eximbank Raises US$1 Billion from Dual-Tranche
Bond Sale
BONDS: Greentown hails return of big books
IFRAsia (17 September 2013)
Kexim adds FRN tranche in latest fund raising
The Asset (13 September 2013)
Fitch Ratings Assigns A+(tha) Rating to CP ALL’s Secured
Bonds; Moody’s Assigns Ba3 (hyb) Rating to Metrobank’s
