OCBC TREASURY RESEARCH - Asian Credit Daily Monday, April 25, 2022
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OCBC TREASURY RESEARCH Asian Credit Daily Monday, April 25, 2022 Market Commentary ▪ The SGD SORA curve traded higher on Friday, with shorter tenors trading 9-11bps higher, belly tenors trading 6-8bps higher, and longer tenors trading 4bps higher. ▪ There were heavy flows in SGD corporates on Friday, with flows in CS 5.625%-PERPs, KITSP 3%'26s, UOBSP 2.55%- PERPs, STANLN 5.375%-PERPs and SOCGEN 6.125%-PERPs. ▪ UST 10Y yields traded 1bps lower to 2.90% on Friday, but nonetheless remains near a 3-year record high as investors continued to digest news of the Fed’s increasingly aggressive and hawkish tone. Moving into the week ahead, numerous key releases are scheduled, including the preliminary data on US first quarter growth, personal consumption expenditure (“PCE”) inflation readings, and earnings report from numerous S&P500 companies. Credit Summary: ▪ Industry Outlook – Singapore Residential Property: URA released 1Q2022 real estate statistics. Private residential property prices rose by 0.7% q/q, rising at a slower trend versus 4Q2021 (4Q2021’s +5.0% q/q), but supply continues to tighten as take-ups outstripped new launches. We think the overall results point to a strong property market, with diminishing supply and higher rentals which should support prices into the remainder of 2022. Meanwhile for the HDB segment, resale prices grew 2.4% q/q in 1Q2022 (4Q2021: +3.4% q/q). Higher HDB prices are beneficial for upgraders, lending further support to condominium prices.
OCBC TREASURY RESEARCH
Asian Credit Daily
Credit Headlines
Industry Outlook – Singapore Residential Property:
▪ URA released 1Q2022 real estate statistics. Private residential property prices rose by 0.7% q/q, rising
at a slower trend versus 4Q2021 (4Q2021’s +5.0% q/q). The price trend diverged depending on
property segment. The gainers included landed property which saw prices increase 4.2% q/q
(4Q2021: +3.9% q/q) and non-landed properties in Outside Central Region increasing 2.2% q/q
(4Q2021: +5.7% q/q) while non-landed properties in the Core Central Region (“CCR”) declined 0.1%
q/q (4Q2021: +2.7% q/q) and non-landed properties in the Rest of Central Region (“RCR”) declined
2.7% q/q (4Q2021: +6.7% q/q).
▪ That said, only 1,825 units were sold (4Q2021: 3,018 units), which we think is primarily due to decline
in launches with just 613 units launched in the quarter (4Q2021: 2,275 units). That said we note that
resale transactions also dipped to 3,377 units in 1Q2022 (4Q2021: 4,748 units) which could imply
some impact from the property cooling measure that was announced in Dec 2021 which could result
in some buyers staying sidelined.
▪ Supply continues to tighten, with just 14,087 units remaining unsold (4Q2021: 14,154 units), of which
only a mere 3,204 units were launched but unsold (4Q2021: 4,266 units) as take-ups outstripped new
launches. In particular, supply looks very tight for OCR with just 705 units launched but unsold
(4Q2021: 1,051 units) and RCR with just 1,009 units launched but unsold (4Q2021: 1,544 units).
▪ Notably, 1Q2022 rentals picked up strongly, increasing 5.3% q/q for landed properties (4Q2021:
+1.2% q/q) and increasing 4.1% q/q for non-landed properties (4Q2021: +2.7% q/q).
▪ Overall, we think this points to a strong property market with diminishing supply and higher rentals,
which should support prices into the remainder of 2022. We think prices should also be kept firm by
rising construction costs due to higher materials prices and labour cost, while developers with tight
margins are unlikely to cut prices below cost. While homeowners would face headwinds from higher
rates, historically there is not a strong correlation between interest rates and property prices, and in
any case property cooling measures including total debt servicing ratio (“TDSR”) should keep housing
within the means for most buyers – resulting in few forced sellers.
▪ Meanwhile for the HDB segment, resale prices grew 2.4% q/q in 1Q2022 (4Q2021: +3.4% q/q)
though transaction volumes dipped q/q to 6,934 units (4Q2021: 7,940 units), possibly due to
declining supply due to the strong transaction volumes in the prior quarters. Notably, 83 HDB resale
flats were sold above SGD1mn (4Q2021: 85 units). Higher HDB prices are beneficial for upgraders,
lending further support to condominium prices. (URA, OCBC)
Page 2OCBC TREASURY RESEARCH
Asian Credit Daily
Key Market Movements
1W chg 1M chg
25-Apr 25-Apr 1W chg 1M chg
(bps) (bps)
iTraxx Asiax IG 116 5 8 Brent Crude Spot ($/bbl) 103.90 -8.18% -13.88%
iTraxx SovX APAC 30 2 0 Gold Spot ($/oz) 1,924.77 -2.74% -1.71%
iTraxx Japan 61 2 0 CRB 304.23 -2.47% -1.01%
iTraxx Australia 89 3 5 GSCI 745.00 -4.03% -4.68%
CDX NA IG 79 6 7 VIX 28.21 24.27% 35.56%
CDX NA HY 103 -1 -3 CT10 (%) 2.839% -1.39 36.57
iTraxx Eur Main 82 3 2
iTraxx Eur XO 387 14 19 AUD/USD 0.719 -2.23% -4.39%
iTraxx Eur Snr Fin 91 3 2 EUR/USD 1.079 0.06% -1.78%
iTraxx Eur Sub Fin 173 6 6 USD/SGD 1.374 -0.86% -1.14%
iTraxx Sovx WE 5 0 0 AUD/SGD 0.987 1.39% 3.42%
USD Swap Spread 10Y 5 0 -3 ASX 200 7,473 -0.08% 0.91%
USD Swap Spread 30Y -22 0 -6 DJIA 33,811 -1.86% -3.01%
US Libor-OIS Spread 17 2 -14 SPX 4,272 -2.75% -5.97%
Euro Libor-OIS Spread 6 3 5 MSCI Asiax 682 -2.41% -4.45%
HSI 20,084 -6.67% -6.17%
China 5Y CDS 73 5 11 STI 3,339 1.10% -2.18%
Malaysia 5Y CDS 86 7 18 KLCI 1,594 0.29% -0.60%
Indonesia 5Y CDS 108 7 12 JCI 7,130 -2.00% 1.82%
Thailand 5Y CDS 48 4 6 EU Stoxx 50 3,840 0.31% -0.72%
Australia 5Y CDS 18 3 3 Source: Bloomberg
Page 3OCBC TREASURY RESEARCH
Asian Credit Daily
New Issues
▪ Hanrui Overseas Investment Co Ltd (SBLC provider: China Zheshang Bank Co. Ltd, Nanjing Branch)
priced a USD120mn 3-year senior unsecured bond at 3.8%.
▪ Haitong UT Brilliant Ltd (Guarantor: Haitong Unitrust International Financial Leasing Co.) priced a
USD200mn 3-year senior unsecured bond at 4.2%.
▪ Korea East-West Power Co. has arranged investor calls commencing 25 April 2022 for its proposed
USD senior unsecured green bond offering.
Date Issuer Size Tenor Pricing
22-Apr-22 Hanrui Overseas Investment Co Ltd USD120mn 3-year 3.8%
22-Apr-22 Haitong UT Brilliant Ltd USD200mn 3-year 4.2%
Source: OCBC, Bloomberg
Temporary Suspension
▪ Do note that our official coverage on Ascendas Real Estate Investment Trust, Crédit Agricole SA, City
Developments Limited, OUE Commercial Trust and Sembcorp Industries Ltd are temporarily
suspended due to OCBC’s other business.
Page 4OCBC 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 5
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