OCBC TREASURY RESEARCH - Asian Credit Daily Friday, July 8, 2022
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OCBC TREASURY RESEARCH Asian Credit Daily Friday, July 8, 2022 Market Commentary ▪ The SGD SORA curve traded mostly higher yesterday, with shorter tenors trading 10-11bps higher, belly tenors trading 9-10bps higher, and longer tenors traded 6-7bps higher. ▪ There were heavy flows in SGD corporates yesterday, with flows in HSBC 5.25%'32s, BACR 8.3%-PERPs, SOCGEN 6.125%-PERPs, UOBSP 4.25%-PERPs, BNP 5.25%'32s, ABNANV 0%'32s, CS 5.625%-PERPs and UBS 5.875%- PERPs. ▪ UST 10Y yields traded 6bps higher to 2.99%. With the UST 2Y yield closing at 3.01%, yesterday marked the third consecutive day with an inversion in the 2Y-10Y UST yield curve as markets remained cautious over recessionary fears. That said, Federal Reserve (“Fed”) Governor Christopher Waller and St. Louis Fed President James Bullard both expressed their support for another 75bps rate hike in July and thought that recession fears are overblown, although Waller commented that “we are going to be aggressive on rate hikes and we may have to take the risk of causing some economic damage”. Separately, data for Initial Jobless Claims for the week ended 2 July came out at 235,000, beating Bloomberg median estimates of 230,000 and prior week’s reading of 231,000. Credit Summary: ▪ Industry Outlook – Singapore Property: HDB resale prices rose 1.2% m/m in Jun 2022 with gains broad-based across 3-room, 4-room, and executive flats at 1% while 5-room flat prices rose by 1.4%. ▪ Keppel Corporation Limited (“KEP”) | Issuer Profile: Neutral (5): Keppel Seghers Pte Ltd, (“Keppel Seghers”) has signed a Memorandum of Understanding (“MOU”) for a joint study on the feasibility of carbon capture at Singapore’s waste-to-energy (“WTE”) plants. ▪ Lippo Malls Indonesia Retail Trust (“LMRT”) | Issuer Profile: Negative (6): Announced yesterday that Fitch Ratings has downgraded its Long Term Issuer Default Ratings to “B” from “B+” with a Stable outlook. ▪ SPH REIT (“SPHR”) | Issuer Profile: Neutral (4): SPHR released its key business and operational updates for 3QFY2022 for the quarter ending 31 May 2022. Key information released include revenue growth, portfolio occupancy rates, weighted average lease expiry by gross rental income, tenant sales, gearing ratios and average cost of debt. We continue to hold SPH REIT at Neutral (4) Issuer Profile.
OCBC TREASURY RESEARCH
Asian Credit Daily
Credit Headlines
Industry Outlook – Singapore Property:
▪ According to flash estimates from SRX and 99.co, HDB resale prices rose 1.2% m/m in Jun 2022,
which marks the 24th consecutive month of gain. Y/y, HDB resale prices were up 11.4%.
▪ The gains were broad-based across 3-room, 4-room, and executive flats which rose 1% each, while 5-
room flat prices rose by 1.4%.
▪ In this month, there were 31 HDB units that sold for at least a million, with 168 of such million-dollar
transactions in YTD2022.
▪ We think the strong HDB resale market should support upgraders and keep demand for private
residential housing firm. (SRX, Business Times, OCBC)
Keppel Corporation Limited (“KEP”) | Issuer Profile: Neutral (5):
▪ Keppel Seghers Pte Ltd, (“Keppel Seghers”), an indirect wholly-owned subsidiary of KEP, and the
National Environment Agency (“NEA”) has signed a Memorandum of Understanding (“MOU”) for a
joint study on the feasibility of carbon capture at Singapore’s waste-to-energy (“WTE”) plants.
(Company)
Lippo Malls Indonesia Retail Trust (“LMRT”) | Issuer Profile: Negative (6):
▪ Yesterday, LMRT announced that Fitch Ratings has downgraded its Long Term Issuer Default Ratings
to “B” from “B+” with a Stable outlook.
▪ This follows the move by Moody’s which on 22 June 2022 downgraded LMRT’s corporate family
rating to B2 from B1, with a Negative outlook.
▪ We think that the ratings are in-line with LMRT’s Negative (6) Issuer Profile and hence we keep the
Issuer Profile unchanged. (Company, OCBC)
Page 2OCBC TREASURY RESEARCH
Asian Credit Daily
Credit Headlines
SPH REIT (“SPHR”) | Issuer Profile: Neutral (4):
▪ SPHR released its key business and operational updates for 3QFY2022 for the quarter ending 31 May
2022. Revenue saw a slight increase of 0.9% y/y to SGD211.6mn. This is due to easing of pandemic
restrictions that stabilized overall portfolio performance with the retail portfolio in Singapore
contributing higher gross revenue y/y.
▪ By geography, Singapore contributes ~76% to the total revenue. The balance contribution is from
Westfield Marion in South Australia and Figtree Grove in New South Wales.
▪ Portfolio occupancy decreased q/q from 98.4% to 97.6%. This is due to the decrease in occupancy
across its portfolio of properties except for The Rail Mall in Singapore. We think that that fall in
occupancy rate maybe transitory considering brighter outlook in general for the retail sector with the
relaxation of border and travel restriction. Weighted average lease expiry (“WALE”) by gross rental
income (“GRI”) increased from 2.8 years to 2.9 years q/q. Per management, lease renewals
sentiment has improved for its Singapore properties though tenants for the Australia portfolio are
still cautious.
▪ With Singapore relaxing pandemic related restriction in March/ April 2022, Paragon’s monthly tenant
sales saw a marked recovery. Tenant sales for The Clementi Mall remains resilient tracking above
pre-pandemic levels and improving +6.3% y/y due to strong F&B performance. Similarly, tenant sales
in Australia also improved for Westfield Marion (+9% y/y) and Figtree Grove (+6% y/y).
▪ Gearing is unchanged at around 30.1% given that the total debt (~SGD1.3bn) remains the same q/q.
Excluding perpetuals, average cost of debt is at 1.67%, 1bps higher compared to previous quarter.
SGD55mn of debt will be maturing in the remainder of FY2022, which we expect will be refinanced
given SGD225mn in available undrawn facilities. We continue to hold SPH REIT at Neutral (4) Issuer
Profile. (Company, OCBC)
Page 3OCBC TREASURY RESEARCH
Asian Credit Daily
Key Market Movements
1W chg 1M chg
8-Jul 8-Jul 1W chg 1M chg
(bps) (bps)
iTraxx Asiax IG 151 4 43 Brent Crude Spot ($/bbl) 104.81 -6.11% -15.19%
iTraxx SovX APAC 42 2 12 Gold Spot ($/oz) 1,744.91 -3.67% -5.85%
iTraxx Japan 110 1 41 CRB 285.08 -4.76% -13.38%
iTraxx Australia 140 8 47 GSCI 691.20 -6.23% -15.57%
CDX NA IG 93 -8 9 VIX 26.08 -7.39% 8.85%
CDX NA HY 99 2 -2 CT10 (%) 2.993% 11.24 -2.88
iTraxx Eur Main 117 -4 27
iTraxx Eur XO 581 -10 128 AUD/USD 0.686 0.62% -4.70%
iTraxx Eur Snr Fin 129 -3 29 EUR/USD 1.019 -2.17% -4.93%
iTraxx Eur Sub Fin 245 -7 54 USD/SGD 1.399 -0.13% -1.62%
iTraxx Sovx WE 5 1 0 AUD/SGD 0.959 -0.75% 3.17%
USD Swap Spread 10Y 9 1 1 ASX 200 6,714 2.66% -5.72%
USD Swap Spread 30Y -26 -2 -4 DJIA 31,385 1.14% -4.64%
US Libor-OIS Spread 10 0 -2 SPX 3,903 2.19% -5.18%
Euro Libor-OIS Spread 34 2 15 MSCI Asiax 650 0.22% -6.07%
HSI 21,644 -0.99% -1.69%
China 5Y CDS 82 -2 13 STI 3,136 1.30% -2.79%
Malaysia 5Y CDS 102 0 23 KLCI 1,422 -1.92% -6.69%
Indonesia 5Y CDS 147 6 43 JCI 6,653 -3.75% -7.52%
Thailand 5Y CDS 65 1 17 EU Stoxx 50 3,489 0.97% -7.93%
Australia 5Y CDS 29 2 6 Source: Bloomberg
Page 4OCBC TREASURY RESEARCH
Asian Credit Daily
New Issues
▪ LG Chem Ltd priced a USD300mn 3-year senior unsecured green bond at T+140bps, tightening from
an IPT of T+165bps area.
▪ Shanghai Pudong Development Bank Co Ltd/London priced a 3-year USD400mn senior unsecured
green bond at T+32bps, tightening from an IPT of T+80bps area.
▪ Export-Import Bank of China priced two 2.5-year senior unsecured bonds totaling USD200mn at a
coupon rate of 2.875%.
▪ Societe Generale SA priced a SGD200mn PerpNC5.5 Additional Tier 1 junior subordinated bond at
8.25%.
▪ Toyota Motor Finance (Netherlands) BV priced a 2-year SGD110mn senior unsecured bond at 3.15%.
▪ Huai'An Traffic Holding Group Co Ltd has mandated banks for its proposed USD senior unsecured
bonds offering.
Date Issuer Size Tenor Pricing
07-Jul-22 LG Chem Ltd USD300mn 3-year T+140bps
07-Jul-22 Shanghai Pudong Development Bank Co Ltd/London USD400mn 3-year T+32bps
USD100mn 2.5-year 2.875%
07-Jul-22 Export-Import Bank of China
USD100mn 2.5-year 2.875%
07-Jul-22 Societe Generale SA SGD200mn PERPNC5.5 8.25%
07-Jul-22 Toyota Motor Finance (Netherlands) BV SGD110mn 2-year 3.15%
Source: OCBC, Bloomberg
Temporary Suspension
▪ Do note that our official coverage on Barclays PLC, BNP Paribas SA, City Developments Limited,
Frasers Hospitality Trust and Frasers Property Limited are temporarily suspended due to OCBC’s
other business.
Page 5OCBC TREASURY RESEARCH Asian Credit Daily This publication is solely for information purposes only and may not be published, circulated, reproduced, or distributed in whole or in part to any other person without our prior written consent. This publication should not be construed as an offer or solicitation for the subscription, purchase or sale of the securities/instruments mentioned herein. Any forecast on the economy, stock market, bond market and economic trends of the markets provided is not necessarily indicative of the future or likely performance of the securities/instruments. Whilst the information contained herein has been compiled from sources believed to be reliable and we have taken all reasonable care to ensure that the information contained in this publication is not untrue or misleading at the time of publication, we cannot guarantee and we make no representation as to its accuracy or completeness, and you should not act on it without first independently verifying its contents. The securities/instruments mentioned in this publication may not be suitable for investment by all investors. Any opinion or estimate contained in this report is subject to change without notice. We have not given any consideration to and we have not made any investigation of the investment objectives, financial situation or particular needs of the recipient or any class of persons, and accordingly, no warranty whatsoever is given and no liability whatsoever is accepted for any loss arising whether directly or indirectly as a result of the recipient or any class of persons acting on such information or opinion or estimate. This publication may cover a wide range of topics and is not intended to be a comprehensive study or to provide any recommendation or advice on personal investing or financial planning. Accordingly, they should not be relied on or treated as a substitute for specific advice concerning individual situations. Please seek advice from a financial adviser regarding the suitability of any investment product taking into account your specific investment objectives, financial situation, or particular needs before you make a commitment to purchase the investment product. OCBC and/or its related and affiliated corporations may at any time make markets in the securities/instruments mentioned in this publication and together with their respective directors and officers, may have or take positions in the securities/instruments mentioned in this publication and may be engaged in purchasing or selling the same for themselves or their clients, and may also perform or seek to perform broking and other investment or securities-related services for the corporations whose securities are mentioned in this publication as well as other parties generally. There may be conflicts of interest between Oversea-Chinese Banking Corporation Limited (“OCBC Bank”), Bank of Singapore Limited, OCBC Investment Research Private Limited, OCBC Securities Private Limited or other members of the OCBC Group and any of the persons or entities mentioned in this report of which OCBC Bank and its analyst(s) are not aware due to OCBC Bank’s Chinese Wall arrangement. This report is intended for your sole use and information. By accepting this report, you agree that you shall not share, communicate, distribute, deliver a copy of or otherwise disclose in any way all or any part of this report or any information contained herein (such report, part thereof and information, “Relevant Materials”) to any person or entity (including, without limitation, any overseas office, affiliate, parent entity, subsidiary entity or related entity) (any such person or entity, a “Relevant Entity”) in breach of any law, rule, regulation, guidance or similar. In particular, you agree not to share, communicate, distribute, deliver or otherwise disclose any Relevant Materials to any Relevant Entity that is subject to the Markets in Financial Instruments Directive (2014/65/EU) (“MiFID”) and the EU’s Markets in Financial Instruments Regulation (600/2014) (“MiFIR”) (together referred to as “MiFID II”), or any part thereof, as implemented in any jurisdiction. No member of the OCBC Group shall be liable or responsible for the compliance by you or any Relevant Entity with any law, rule, regulation, guidance or similar (including, without limitation, MiFID II, as implemented in any jurisdiction). Co.Reg.no.:193200032W Page 6
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