OCBC TREASURY RESEARCH - Asian Credit Daily Monday, June 21, 2021
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OCBC TREASURY RESEARCH
Asian Credit Daily
Monday, June 21, 2021
Market Commentary
▪ The SGD swap curve flattened last Friday, with shorter tenors
Credit Research
trading 1-3bps higher while belly tenors traded flattish to 1bps
lower and longer tenors traded 3-4bps lower. Andrew Wong
+65 6530 4736
▪ There were heavy flows in SGD corporates on Friday, including WongVKAM@ocbc.com
UOBSP 2.55%-PERPs, MAGIC 3.5%-PERPs, STSP 3.3%-PERPs,
STANLN 5.375%-PERPs, MINTSP 3.15%-PERPs and CPIPGR Ezien Hoo, CFA
5.8%-PERPs. +65 6722 2215
▪ UST 10Y Yields slipped 7bps to 1.44% while short-term yields EzienHoo@ocbc.com
gained after the Fed update, reflecting expectations for the Fed
to gradually increase short-term rates with growth slowing over Wong Hong Wei, CFA
the long-term. +65 6722 2533
WongHongWei@ocbc.com
Seow Zhi Qi, CFA
+65 6530 7348
zhiqiseow@ocbc.com
Credit Summary:
▪ CapitaLand Ltd (“CAPL”) | Issuer Profile: Neutral (3): Following the announcement last Wednesday that
The Ascott Ltd (“Ascott”) and its hospitality trust Ascott Residence Trust will jointly invest and develop a
freehold student accommodation in USA for USD109.9mn (SGD146.2mn), CAPL announced a separate
move by Ascott to acquire two properties in France and Vietnam for SGD210mn through the Ascott Service
Residence Global Fund (“ASRGF”).
▪ Commonwealth Bank of Australia (“CBA”) | Issuer Profile: Positive (2): CBA announced the sale of
CommInsure General Insurance to Hollard Group. The total price is reportedly around AUD1bn, which
includes an upfront AUD625mn payment and deferred payments on achieving certain milestones. The sale
will increase CBA’s APRA compliant CET1 ratio by around AUD400mn or 9bps with a post-tax gain of around
AUD90mn. CBA’s APRA compliant CET1 ratio remains solid at 12.7% as at 31 March 2021. This divestment is
in line with CBA’s peers who have also divested their insurance businesses to focus on core banking
businesses in Australia and New Zealand including Westpac Banking Corporation ((“Westpac”) | Issuer
Profile: Positive (2)). We maintain the Positive (2) issuer profile.
▪ HSBC Holdings PLC (“HSBC”) | Issuer Profile: Neutral (3): Further to reports that HSBC has reportedly
agreed to sell its French retail unit to private equity firm Cerberus, HSBC announced that the sale will cost
around USD3bn. This is made up of a USD2.3bn pretax loss as well as a USD700mn goodwill impairment
should the sale complete.
Click Here to access the latest reports from OCBC Credit ResearchOCBC TREASURY RESEARCH
Asian Credit Daily
Credit Headlines
CapitaLand Ltd (“CAPL”) | Issuer Profile: Neutral (3)
▪ Following the announcement last Wednesday that The Ascott Ltd (“Ascott”) and its hospitality trust
Ascott Residence Trust will jointly invest and develop a freehold student accommodation in USA for
USD109.9mn (SGD146.2mn), CAPL announced a separate move by Ascott to acquire two properties
in France and Vietnam for SGD210mn through the Ascott Service Residence Global Fund (“ASRGF”).
▪ ASRGF is a 50-50 joint venture private equity fund with Qatar Investment Authority, which will boost
Ascott’s total fund assets under management to about SGD8bn.
▪ The acquisition in France will be rebranded to a coliving property under the lyf brand. There are five
more lyf properties in Singapore and China that will open in 2021, and will continue to look for
opportunities to expand the lyf brand in gateway and tech cities in Asia Pacific and Europe. Ascott
flagged that lyf Funan Singapore has an average occupancy rate of about 90%. (Company, OCBC)
Commonwealth Bank of Australia (“CBA”) | Issuer Profile: Positive (2)
▪ CBA announced the sale of CommInsure General Insurance to Hollard Group. The total price is
reportedly around AUD1bn, which includes an upfront AUD625mn payment and deferred payments
on achieving certain milestones.
▪ Other components of the sale include an exclusive 15 year strategic alliance for Hollard Group to
distribute home and motor vehicle insurance to CBA customers and a pre-completion dividend. The
transaction is expected to complete in mid-2022 and is subject to Australian Prudential Regulation
Authority (“APRA”) approval.
▪ The sale will increase CBA’s APRA compliant CET1 ratio by around AUD400mn or 9bps with a post-tax
gain of around AUD90mn. CBA’s APRA compliant CET1 ratio remains solid at 12.7% as at 31 March
2021.
▪ This divestment is in line with CBA’s peers who have also divested their insurance businesses to focus
on core banking businesses in Australia and New Zealand including Westpac Banking Corporation
((“Westpac”) | Issuer Profile: Positive (2)). We maintain the Positive (2) issuer profile. (Company,
OCBC)
HSBC Holdings PLC (“HSBC”) | Issuer Profile: Neutral (3)
▪ Further to reports that HSBC has reportedly agreed to sell its French retail unit to private equity firm
Cerberus, HSBC announced that the sale will cost around USD3bn. This is made up of a USD2.3bn
pretax loss as well as a USD700mn goodwill impairment should the sale complete.
▪ The capital impact of 15bps will be mostly recorded in FY2022 with HSBC selling the loss making
business for EUR1.
▪ Its CET1 ratio was 15.9% as at 31 March 2021, above its target range and also above its maximum
distributable amount (“MDA”) requirement of 10.9%. The sale looks manageable at current
fundamentals in our view. (Bloomberg, OCBC)
Page 2OCBC TREASURY RESEARCH
Asian Credit Daily
Key Market Movements
1W chg 1M chg
21-Jun 21-Jun 1W chg 1M chg
(bps) (bps)
iTraxx Asiax IG 85 2 -4 Brent Crude Spot ($/bbl) 73.59 1.00% 10.76%
iTraxx SovX APAC 25 0 -2 Gold Spot ($/oz) 1,771.07 -5.10% -5.86%
iTraxx Japan 45 0 -3 CRB 205.86 -3.01% 2.48%
iTraxx Australia 58 1 -2 GSCI 520.03 -2.25% 2.69%
CDX NA IG 50 3 -1 VIX 20.7 32.27% 2.73%
CDX NA HY 110 -1 0 CT10 (%) 1.438% -5.59 -18.35
iTraxx Eur Main 48 2 -4
iTraxx Eur XO 235 9 -19 AUD/USD 0.751 -2.67% -2.92%
iTraxx Eur Snr Fin 55 1 -4 EUR/USD 1.187 -2.03% -2.53%
iTraxx Eur Sub Fin 108 -9 -1 USD/SGD 1.345 -1.36% -0.94%
iTraxx Sovx WE 5 0 0 AUD/SGD 1.009 1.35% 2.01%
USD Sw ap Spread 10Y -4 -1 -1 ASX 200 7,272 -0.55% 3.44%
USD Sw ap Spread 30Y -31 0 -2 DJIA 33,290 -3.45% -2.68%
US Libor-OIS Spread 4 0 -4 SPX 4,166 -1.91% 0.25%
Euro Libor-OIS Spread -6 0 1 MSCI Asiax 881 -1.17% 1.94%
HSI 28,801 0.22% 1.20%
China 5Y CDS 37 2 -3 STI 3,144 -0.44% 0.84%
Malaysia 5Y CDS 45 2 -2 KLCI 1,589 0.88% 1.72%
Indonesia 5Y CDS 74 2 -4 JCI 6,007 -1.45% 4.05%
Thailand 5Y CDS 38 1 -3 EU Stoxx 50 4,083 -1.05% 1.43%
Australia 5Y CDS 15 0 -12 Source: Bloomberg
Page 3OCBC TREASURY RESEARCH
Asian Credit Daily
New Issues
▪ Jinan HI-Tech International Cayman Investment Development Co Ltd priced a USD170mn 3-year
senior unsecured bond at 2.5%, tightening from IPT of 3% area.
Date Size Tenor Pricing
Jinan HI-Tech International Cayman
18-June-21 USD170mn 3-year 2.5%
Investment Development Co Ltd
Source: OCBC, Bloomberg
Page 4OCBC TREASURY RESEARCH
Asian Credit Daily
Treasury Research & Strategy
Macro Research
Selena Ling Tommy Xie Dongming Wellian Wiranto Howie Lee
Head of Research & Strategy Head of Greater China Malaysia & Indonesia Thailand, Korea &
LingSSSelena@ocbc.com Research WellianWiranto@ocbc.com Commodities
XieD@ocbc.com HowieLee@ocbc.com
Carie Li Herbert Wong
Hong Kong & Macau Hong Kong & Macau
carierli@ocbcwh.com herberthtwong@ocbcwh.com
FX/Rates Strategy
Frances Cheung Terence Wu
Rates Strategist FX Strategist
FrancesCheung@ocbc.com TerenceWu@ocbc.com
Credit Research
Andrew Wong Ezien Hoo Wong Hong Wei Seow Zhi Qi
Credit Research Analyst Credit Research Analyst Credit Research Analyst Credit Research Analyst
WongVKAM@ocbc.com EzienHoo@ocbc.com WongHongWei@ocbc.com ZhiQiSeow@ocbc.com
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