OCBC TREASURY RESEARCH - Asian Credit Daily Monday, April 4, 2022 - OCBC Bank
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OCBC TREASURY RESEARCH Asian Credit Daily Monday, April 4, 2022 Market Commentary ▪ The SORA curve traded higher yesterday, with shorter tenors trading 5-8bps higher, belly and longer tenors trading 8-10bps higher (with the exception of 30Y which traded 13bps higher). ▪ There were moderate flows in SGD corporates on Friday, with flows in CS 5.625%-PERPs and UBS 5.875%-PERPs. ▪ UST 10Y yields traded 4bps higher to 2.38% on Friday, as risk-on sentiments improved with the release of labour market data for the month. While nonfarm payrolls came in at a 431,000 increase which was lower than Bloomberg median estimates of a 490,000 increase and that of February’s 678,000 increase, the unemployment rate declined more than expected to 3.6% compared to Bloomberg median estimate of 3.7% and February’s 3.8% figure. Overall, labour market data was interpreted favourably as a signal of a recovering labour market. Credit Summary: ▪ SPH REIT | Issuer Profile: Neutral (4): SPH REIT released its first half results (1H FY2022) for the period ended 28 February 2022. Gross revenue increased slightly by 1.2% y/y to SGD141.6mn, mainly contributed by lower rental waivers and reliefs granted by landlord to tenants as market recovers gradually. SPHR continues to maintain its healthy occupancy rate for both the Singapore and Australia assets. We think that upcoming lease expiries are manageable for SPHR, and continue to hold SPHR at a Neutral (4) Issuer Profile. ▪ Industry Outlook – Singapore Developers: CapitaLand Group Pte Ltd (“CAPL”) | Issuer Profile: Neutral (4), Frasers Property Ltd (“FPL”) | Issuer Profile: Neutral (5), GuocoLand Ltd (“GUOL”) | Issuer Profile: Neutral (5): CAPL’s development arm CapitaLand Development was awarded two prime residential sites in China, one in Wuhan and Chengdu, for a total of RMB3.49bn (~SGD748mn). Mr Peter Lee Wai Mun is appointed as the new Country Managing Director of GuocoLand China to oversee GUOL’s business in China and its portfolio of development and investment assets in China. We think these moves are indicative of Singapore corporates’ renewed interest in property development in China, with CAPL outright citing recovery of China’s real estate sector.
OCBC TREASURY RESEARCH
Asian Credit Daily
Credit Headlines
SPH REIT | Issuer Profile: Neutral (4):
▪ SPH REIT released its first half results (1H FY2022) for the period ended 28 February 2022. Gross
revenue increased slightly by 1.2% y/y to SGD141.6mn. This was mainly contributed by lower rental
waivers and reliefs granted by landlord to tenants as market recovers gradually. Net property income
(“NPI”) similarly saw a minimal increase of 0.4% y/y to SGD105.3mn as NPI growth was affected by
the increase in property operating expenses due to spike in electricity rates. Per management, they
are expecting a 30% increase in utilities on a h/h basis.
▪ SPHR continues to maintain its healthy occupancy rate for both the Singapore and Australia assets.
On average, the occupancy rates are at 99.1% and 98.5% respectively for Singapore and Australia
assets as of 28 February 2022. Rental reversion for Singapore assets saw improvement from 31 Aug
2021 where it is down 8.2%. As at 28 February 2022, though still in the negative territory, rental
reversion improved by 1.8% to -6.4%. This is mainly due to 8.9% reversion rate at The Rail Mall
though offset by negative reversions at Paragon (-7.3%) and Clementi Mall (-4.0%). Per
announcement, SPHR’s management mentioned due to impact of geopolitical crisis on oil prices and
general market sentiment, they are still sanguine regarding the pace of recovery.
▪ On lease management, in FY2022, there is 8% of lease expiries by NLA for overall SPHR’s portfolio
with the higher percentage of 11% expiries by NLA seen for the Australia assets. We think that the
lease expiries are manageable for SPHR. SPHR has a WALE of 5.5 years by NLA and 2.8 years by gross
rental income (“GRI”).
▪ SPH’s Singapore investment properties recorded a fair value gain of SGD32.3mn, mainly due to
Paragon (+SGD30mn to SGD2.67bn) and while its Australia portfolio saw a fair value loss of
SGD0.2mn. The improved valuation is supported by market recovery. As for tenant sales, Paragon
and Westfield Marion both recorded +1% y/y and The Clementi Mall registered +6% y/y increased.
While tenant sales for Figtree Grove declined approximately 10% y/y due to the prolong lockdown in
New South Wales.
▪ Meanwhile, aggregate leverage remained stable y/y at 30.1% (1HFY2021: 30.4%). SGD105mn of debt
will be maturing in FY2022, which is sufficiently covered by cash of SGD110mn and a revolving credit
facility of SGD225mn which remains undrawn. We continue to hold SPHR at a Neutral (4) Issuer
Profile. (Company, OCBC)
Page 2OCBC TREASURY RESEARCH
Asian Credit Daily
Credit Headlines
Industry Outlook – Singapore Developers: CapitaLand Group Pte Ltd (“CAPL”) | Issuer Profile: Neutral
(4), Frasers Property Ltd (“FPL”) | Issuer Profile: Neutral (5), GuocoLand Ltd (“GUOL”) | Issuer Profile:
Neutral (5):
▪ CAPL’s development arm CapitaLand Development was awarded two prime residential sites in China,
one in Wuhan and Chengdu, for a total of RMB3.49bn (~SGD748mn). The plan is to build 1581 homes
with construction expected to begin this year.
o The Wuhan site (RMB2.31bn, ~SGD495mn) is located in the central business district in Qiaokou
District with a GFA of 146,000 sqm while the Chengdu site (RMB1.18bn, ~SGD253mn) is located in
Chenghua District of Northeast Chengdu with a GFA of 73,453 sqm.
o According to CAPL, China remains one of CAPL’s core markets and believes that the moves ‘taken
by the authorities to reduce speculation will promote the healthy and sustained development of
China’s housing market’ and expects China’s real estate sector is “on the path to recovery”
following government’s recent pledge on policy easing.
o We note that CAPL cited data that Wuhan’s housing transaction volume for Mar 2022 rose ~50%
m/m while in Chengdu the sales of new homes for Jan to Feb 2022 increased y/y.
▪ Mr Peter Lee Wai Mun (“Peter”) is appointed as the new Country Managing Director of GuocoLand
China to oversee GUOL’s business in China and its portfolio of development and investment assets in
China.
o Peter served in Keppel Land China in 2008-2020, including the role as Deputy Head of Business
Development. Before joining the private sector in 2008, Peter was with the Singapore public
service as International Enterprise Singapore, where he founded and led the Western China
operations to help Singapore companies secure business opportunities in Western China.
▪ The above moves made by GUOL and CAPL follows FPL which on last Monday announced total capital
outlay of RMB3.04bn towards potential investment in certain land plots in China.
▪ We think these moves are indicative of Singapore corporates’ renewed interest in property
development in China, with CAPL outright citing recovery of China’s real estate sector. (Company,
OCBC)
Page 3OCBC TREASURY RESEARCH
Asian Credit Daily
Key Market Movements
1W chg 1M chg
4-Apr 4-Apr 1W chg 1M chg
(bps) (bps)
iTraxx Asiax IG 102 -5 -12 Brent Crude Spot ($/bbl) 103.72 -7.79% -12.18%
iTraxx SovX APAC 23 -6 -10 Gold Spot ($/oz) 1,925.68 0.15% -2.28%
iTraxx Japan 60 -2 -6 CRB 293.18 -4.60% -2.26%
iTraxx Australia 82 -3 -12 GSCI 721.21 -7.73% -7.93%
CDX NA IG 67 -4 -8 VIX 19.63 -5.67% -38.62%
CDX NA HY 105 1 1 CT10 (%) 2.399% -5.98 66.80
iTraxx Eur Main 72 -7 -10
iTraxx Eur XO 339 -22 -59 AUD/USD 0.749 0.04% 1.66%
iTraxx Eur Snr Fin 81 -6 -15 EUR/USD 1.105 0.59% 1.12%
iTraxx Eur Sub Fin 155 -8 -27 USD/SGD 1.357 0.32% 0.27%
iTraxx Sovx WE 4 0 -1 AUD/SGD 1.016 0.30% -1.31%
USD Swap Spread 10Y 6 -2 -2 ASX 200 7,527 1.54% 5.85%
USD Swap Spread 30Y -21 -4 3 DJIA 34,818 -0.12% 3.58%
US Libor-OIS Spread 22 -10 3 SPX 4,546 0.06% 5.01%
Euro Libor-OIS Spread 3 2 6 MSCI Asiax 726 1.64% 0.28%
HSI 22,040 2.97% 0.61%
China 5Y CDS 62 -2 1 STI 3,419 0.16% 5.96%
Malaysia 5Y CDS 68 -1 -8 KLCI 1,602 -0.06% -0.10%
Indonesia 5Y CDS 85 -9 -30 JCI 7,079 1.09% 2.17%
Thailand 5Y CDS 39 -3 -5 EU Stoxx 50 3,919 1.32% 10.20%
Australia 5Y CDS 16 0 0 Source: Bloomberg
Page 4OCBC TREASURY RESEARCH
Asian Credit Daily
New Issues
▪ Fuyuan Worldwide Ltd (Guarantor: Shandong Commercial Group Co Ltd, SBLC provider: Bank of
Beijing Co., Jinan Branch) priced a USD60mn 2-year credit enhanced guaranteed bond at 3.4%.
Date Issuer Size Tenor Pricing
Fuyuan Worldwide Ltd (Guarantor: Shandong
1-Apr-22 Commercial Group Co. Ltd, SBLC provider: Bank of USD60mn 2-year 3.4%
Beijing Co., Jinan Branch)
Source: OCBC, Bloomberg
Temporary Suspension
▪ Do note that our official coverage on City Developments Limited, First Real Estate Investment Trust,
Frasers Centrepoint Trust, Lendlease Group, Lendlease Global Commercial Trust and Singapore Post
Ltd 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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