OCBC TREASURY RESEARCH - Asian Credit Daily Friday, June 10, 2022
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OCBC TREASURY RESEARCH Asian Credit Daily Friday, June 10, 2022 Market Commentary ▪ The SGD SORA curve traded mostly higher yesterday, with shorter tenors trading 4-5bps higher, belly tenors trading 2-3bps higher and longer tenors traded 1-2bps higher (with the exception of 30Y which traded lower by 1bps). ▪ There were heavy flows in SGD corporates yesterday, with flows in OCBCSP 3.9%-PERPs, CS 5.625%-PERPs, HSBC 5%- PERPs and STHSP 3.95%-PERPs. ▪ UST 10Y yields traded 2bps higher to 3.04% yesterday, continuing the upward climb from the previous two days as investors await the consumer price data for May to be released tonight (Singapore time) from the US Bureau of Labor Statistics. The White House commented on Thursday that they expect the next round of economic data to show elevated figures on inflation due to the Ukraine war and its effects on gas prices as well as ongoing supply chain issues. Separately, the CBOE Volatility Index rose more than 2 points to close above 26 for the first time in June and initial jobless claims for the week ended 4 June came in at 229,000, above Bloomberg’s median estimates of 206,000. Credit Summary: ▪ Industry Outlook – Singapore Credit Outlook: Singapore yesterday published the Singapore Green Bond Framework for sovereign green bond issuances by public sector agencies under the Significant Infrastructure Government Loan Act 2021 (SINGA). The framework details the Singapore Government’s (i) intended use of green bond proceeds, (ii) governance structure to evaluate and select eligible projects, (iii) operational approach to manage green bond proceeds, and (iv) commitment to post-issuance allocation and impact reporting. ▪ AIMS APAC REIT (“AAREIT”) | Issuer Profile: Neutral (4): AAREIT has updated that the target date for its acquisition of 315 Alexandra Road (“the Property”) has been extended to 1 July 2022 due to a change in the anchor tenancy arrangement of the Property. ▪ Credit Suisse Group AG (“CS”) | Issuer Profile: Neutral (4): State Street Corp and CS’ CEO Thomas Gottstein has refuted rumours that State Street Corp is looking to acquire Credit Suisse. Separately, the bank announced it is slowing down on its China expansion and delaying the targeted launch of its locally incorporated bank by a year to 2024. The move could also be somewhat related to CS’s need to control costs and investments and the recent global reorganization that has shifted autonomy away from Asia. ▪ Fraser and Neave Ltd (“FNN”) | Issuer Profile: Neutral (4): FNN’s 55.5%-owned Malaysian subsidiary, Fraser & Neave Holdings Bhd Group (“FNN Berhad”) announced that it is proposing to take private Cocoaland Holdings Berhad (“Cocoaland”). The total consideration is expected to be ~MYR488.1mn (~SGD153mn) to be paid in cash.
OCBC TREASURY RESEARCH
Asian Credit Daily
Industry Outlook – Singapore Credit Outlook:
▪ Singapore yesterday published the Singapore Green Bond Framework for sovereign green bond
issuances by public sector agencies under the Significant Infrastructure Government Loan Act 2021
(SINGA). These issuances will also be known as Green SGS (Infrastructure) bonds and will finance
nationally significant infrastructure which meet the green criteria under the Framework. Nationally
significant infrastructure under SINGA is defined as infrastructure projects controlled and legally
owned by the Government, cost at least SGD4bn, have a useful life of at least 50 years, and support
or materially improve national productivity or Singapore’s economic, environmental, or social
sustainability.
▪ The Framework details the Singapore Government’s (i) intended use of green bond proceeds, (ii)
governance structure to evaluate and select eligible projects, (iii) operational approach to manage
green bond proceeds, and (iv) commitment to post-issuance allocation and impact reporting.
▪ Key principles of the framework include:
o Alignment with internationally recognised market principles and standards including the
International Capital Market Association (ICMA) Green Bond Principles 2021 and the ASEAN
Capital Markets Forum ASEAN Green Bond Standards 2018
o Stringent governance and oversight of project selection and allocation of proceeds through the
Green Bond Steering Committee to be chaired by the Second Minister for Finance. As part of the
Framework’s implementation, the Singapore Government will also commit to annual post-
issuance allocation reporting and impact reporting on environmental benefits and social co-
benefits where possible.
o Technical screening to evaluate and identify green projects with reference to internationally
recognised market principles and standards such as the ICMA Green Bond Principles and the
Climate Bond Initiative (CBI) Taxonomy and Sector Criteria.
▪ Per the release from the Ministry of Finance, proceeds from issuances under the Framework will be
used to finance expenditures to support the Singapore Green Plan 2030 that facilitates the transition
to a low-carbon economy in Singapore. Categories of Eligible Green Expenditures include Renewable
Energy, Energy Efficiency, Green Building, Clean Transportation, Sustainable Water and Wastewater
Management, Pollution Prevention, Control and Circular Economy, Climate Change Adaptation, and
Biodiversity Conservation and Sustainable Management of Natural Resources and Land Use.
▪ The Ministry of Finance will select a list of potential green projects before the Green Bond Steering
Committee reviews the projects based on their use of proceeds. Once the projects are classified as
nationally significant infrastructure, the Green Bond Steering Committee will approve the eligible
green projects and allocate proceeds. Representatives of the Green Bond Steering Committee include
senior government representatives from the Ministry of Finance, the Monetary Authority of
Singapore, the Accountant-General's Department, the Ministry of Sustainability and the Environment
and the Ministry of Transport.
▪ A second part opinion has been provided by Morningstar Sustainalytics to opine that the Framework
is credible, impactful and aligns with internationally recognised market principles and standards.
(Continued on the next page) Page 2OCBC TREASURY RESEARCH
Asian Credit Daily
Industry Outlook – Singapore Credit Outlook:
▪ As a recap, the Singapore Government announced at Budget 2022 that the public sector will issue up
to SGD35bn of green bonds by 2030 to finance public sector green infrastructure projects through
the Singapore Government as well as its Statutory Boards. The government is expected to issue its
first sovereign green bond under the SINGA in the coming months and aims to allocate net proceeds
in full within 2 years and possibly up to 3 years in the initial years of the framework. (MoF,
Bloomberg, Business Times, OCBC)
AIMS APAC REIT (“AAREIT”) | Issuer Profile: Neutral (4):
▪ In relation to the acquisition of 315 Alexandra Road (“the Property”), there is a change in the anchor
tenancy arrangement of the Property.
▪ In previous announcements, the Property is being sold on a partial leaseback arrangement where
Sime Darby Property Singapore Limited (“SDPSL”) will lease back 70% of the building’s total gross
floor area for a minimum of 10 years.
▪ However, with a letter of intent signed with a new anchor tenant, this change may affect the agreed
purchase price of the Property which AAREIT is evaluating. The total transaction cost (including
acquisition cost) as per earlier announcement is SGD106.6mn.
▪ AAREIT updated that the target date has been extended to 1 July 2022. This acquisition was first
announced in January 2021. (Company, OCBC)
Credit Suisse Group AG (“CS”) | Issuer Profile: Neutral (4):
▪ State Street Corp has come out to specifically address rumours that it is looking to acquire Credit
Suisse. The company released a statement confirming “There is no basis to the continuing market
rumors,” and “Although we have a long-standing company policy of not commenting on such
speculation, we feel a response to these reports is now warranted in this instance.” CS’ CEO Thomas
Gottstein also refuted the rumour yesterday in a Goldman Sachs Group Inc. conference and any other
questions on whether CS is a takeover target, also stating that he is holding out hope for CS to report
a profit for second quarter. Before the results announcement, CS will be holding an Investor Deep
Dive on 28 June 2022 to provide further details on its current transitioning activities.
▪ Separately, the bank announced it is slowing down on its China expansion and delaying the targeted
launch of its locally incorporated bank by a year to 2024. This is the second postponement in the past
two years ago due to the slower licensing process and concerns amongst senior Credit Suisse
executives in Zurich to invest at a time when the economy remains exposed to Covid-19 lockdowns
that is impacting the economy and deal-making.
▪ The move could also be somewhat related to CS’s need to control costs and investments and the
recent global reorganization that has shifted autonomy away from Asia. The bank however is
continuing with its plans to take full ownership of its securities joint venture, Credit Suisse Securities
(China) Limited (“CSS”). (Bloomberg, OCBC)
Page 3OCBC TREASURY RESEARCH
Asian Credit Daily
Credit Headlines
Fraser and Neave Ltd (“FNN”) | Issuer Profile: Neutral (4):
▪ FNN’s 55.5%-owned Malaysian subsidiary, Fraser & Neave Holdings Bhd Group (“FNN Berhad”)
announced that it is proposing to take private Cocoaland Holdings Berhad (“Cocoaland”) by buying
shares it does not already own in Cocoaland for MYR1.50 per share. FNN Berhad currently owns a
~28%-stake in Cocoaland, a confectionary and beverage company based in Malaysia.
▪ The total consideration is expected to be ~MYR488.1mn (~SGD153mn) to be paid in cash. The
funding is expected to be via bank borrowings. (Company, Bloomberg)
Page 4OCBC TREASURY RESEARCH
Asian Credit Daily
Key Market Movements
1W chg 1M chg
10-Jun 10-Jun 1W chg 1M chg
(bps) (bps)
iTraxx Asiax IG 110 -1 -22 Brent Crude Spot ($/bbl) 122.13 2.01% 19.20%
iTraxx SovX APAC 31 0 -6 Gold Spot ($/oz) 1,846.26 -0.27% 0.43%
iTraxx Japan 71 4 -5 CRB 329.59 2.01% 10.94%
iTraxx Australia 95 -1 -13 GSCI 816.81 1.05% 12.94%
CDX NA IG 87 6 0 VIX 26.09 5.54% -20.92%
CDX NA HY 100 -1 -1 CT10 (%) 3.051% 11.79 6.03
iTraxx Eur Main 93 4 -3
iTraxx Eur XO 466 22 1 AUD/USD 0.710 -1.44% 2.38%
iTraxx Eur Snr Fin 103 4 -4 EUR/USD 1.063 -0.87% 0.92%
iTraxx Eur Sub Fin 196 7 -10 USD/SGD 1.381 -0.38% 0.69%
iTraxx Sovx WE 5 0 -1 AUD/SGD 0.981 1.10% -1.64%
USD Swap Spread 10Y 7 -1 1 ASX 200 6,966 -3.76% -1.20%
USD Swap Spread 30Y -23 -2 3 DJIA 32,273 -2.93% 0.35%
US Libor-OIS Spread 8 -3 -8 SPX 4,018 -3.81% 0.42%
Euro Libor-OIS Spread 19 3 12 MSCI Asiax 688 1.50% 7.10%
HSI 21,600 2.46% 10.01%
China 5Y CDS 70 -1 -15 STI 3,185 -1.45% -1.52%
Malaysia 5Y CDS 80 -1 -22 KLCI 1,496 -3.50% -3.79%
Indonesia 5Y CDS 107 1 -25 JCI 7,146 -0.51% 4.79%
Thailand 5Y CDS 49 -1 -3 EU Stoxx 50 3,724 -1.86% 4.77%
Australia 5Y CDS 22 -2 -2 Source: Bloomberg
Page 5OCBC TREASURY RESEARCH
Asian Credit Daily
New Issues
▪ Bank of China Ltd/Frankfurt priced a USD500mn 3-year senior unsecured green bond at T+20bps,
tightening from an IPT of T+65bps area.
▪ Shanhai Hong Kong International Investments Ltd (Guarantor: Lianyungang Port Group Co Ltd) priced
a USD250mn 3-year senior unsecured green bond at 5%, tightening from an IPT of 5.3% area.
▪ Coastal Emerald Ltd (Guarantor: Shandong Hi-Speed Group Co Ltd) priced a USD500mn 3-year senior
unsecured green bond at 4.1%, tightening from an IPT of 4.6% area.
▪ Standard Chartered PLC priced a SGD235mn 11NC10 senior unsecured bond at 4.5%.
Date Issuer Size Tenor Pricing
9-Jun-22 Bank of China Ltd/Frankfurt USD500mn 3-year T+20bps
Shanhai Hong Kong International Investments Ltd
9-Jun-22 USD250mn 3-year 5.00%
(Guarantor: Lianyungang Port Group Co Ltd)
Coastal Emerald Ltd
9-Jun-22 USD500mn 3-year 4.10%
(Guarantor: Shandong Hi-Speed Group Co Ltd)
9-Jun-22 Standard Chartered PLC SGD235mn 11NC10 4.50%
Source: OCBC, Bloomberg
Temporary Suspension
▪ Do note that our official coverage on City Developments Limited and China Construction Bank
Corporation are temporarily suspended due to OCBC’s other business.
Page 6OCBC 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 7
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