OCBC TREASURY RESEARCH - Asian Credit Daily Thursday, April 7, 2022
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OCBC TREASURY RESEARCH Asian Credit Daily Thursday, April 7, 2022 Market Commentary ▪ The SORA curve traded higher yesterday, with shorter tenors trading 4-11bps higher, belly tenors trading 13- 14bps higher, and longer tenors trading 12-14bps higher. ▪ There were heavy flows in SGD corporates yesterday, with flows in SPOST 4.35%-PERPs and OLAMSP 5.375%-PERPs. ▪ UST 10Y yields traded 5bps higher to 2.60% yesterday, following the release of hawkish March Federal Open Market Committee (“FOMC”) meetings early this morning (Singapore time). The minutes revealed that “many” officials would have preferred to hike rates by 50bps, but refrained from doing so due to the Russia-Ukraine war. Importantly, the officials also signaled their intentions to reduce their balance sheets by as much as USD95bn per month (USD60bn for treasury securities and USD35bn to cater for mortgage-backed securities). Credit Summary: ▪ Macquarie Group Ltd (“Macquarie”) | Issuer Profile: Neutral (3): Bloomberg reported that Macquarie is exploring the sale of a portion of its 40%-stake in Maryland Express Lanes in the US, which may value the project’s equity at ~USD1.25bn. ▪ Qantas Airways Ltd (“Qantas”) | Issuer Profile: Neutral (5): Qantas disclosed the steps that it is taking to achieve net zero emissions by 2050, including an interim target to reduce carbon emissions by 25% by 2030. Qantas has also signed a Memorandum of Understanding with the Australia & New Zealand Banking Group Ltd and INPEX (a Japan-based oil and gas company) for an integrated reforestation and carbon farming project in Western Australia. ▪ UBS Group AG (“UBS”)| Issuer Profile: Neutral (3): Shareholders of UBS has voted to elect Mr. Colm Kelleher as the new Chairman of UBS, succeeding Mr. Axel Weber. Mr Kelleher was previously President at Morgan Stanley.
OCBC TREASURY RESEARCH
Asian Credit Daily
Credit Headlines
Macquarie Group Ltd (“Macquarie”) | Issuer Profile: Neutral (3):
▪ Bloomberg reported that Macquarie is exploring the sale of a portion of its 40%-stake in Maryland
Express Lanes in the US, which may value the project’s equity at ~USD1.25bn. This stake is owned by
Macquarie as part of its principal investment and advisory arm. (Bloomberg)
Qantas Airways Ltd (“Qantas”) | Issuer Profile: Neutral (4):
▪ Qantas disclosed the steps that it is taking to achieve net zero emissions by 2050, including an interim
target to reduce carbon emissions by 25% by 2030. Qantas’ targets include:
o Sustainable Aviation Fuel (“SAF”): 10% of the fuel mix by 2030 will be in SAF and ~60% by 2050
o Waste reduction: Zero single-use plastics by 2027 and zero general waste (excluding quarantine
waste) to landfill by 2030
o Fuel efficiency: Increase fuel efficiency by an average of 1.5% p.a to 2030, which may be achieved
through updating aircraft fleet and using more efficient flight planning.
o Offsets: Continue to build offsetting program particularly in Australia projects.
▪ Qantas has also signed a Memorandum of Understanding with the Australia & New Zealand Banking
Group Ltd and INPEX (a Japan-based oil and gas company) for an integrated reforestation and carbon
farming project in Western Australia. Marginal farming land will be replanted to plant species that
can generate carbon credits to help offset the carbon footprints of the three companies and longer
term these plants can be a potential source for SAF.
▪ Qantas has also introduced “Green Tier” into its loyalty program, designed to reward green
consumption behaviours among its members for example, offsetting carbon footprint on flights,
staying in eco-hotels and opting for solar panels for houses. Qantas has an established loyalty
program with 13 million frequent flyer members. (Company)
UBS Group AG (“UBS”)| Issuer Profile: Neutral (3):
▪ Shareholders of UBS has voted to elect Mr. Colm Kelleher as the new Chairman of UBS, succeeding
Mr. Axel Weber. Mr. Kelleher retired from Morgan Stanley in 2019 and served as Senior Adviser. Mr
Kelleher was previously President at Morgan Stanley. (Company)
Page 2OCBC TREASURY RESEARCH
Asian Credit Daily
Key Market Movements
1W chg 1M chg
7-Apr 7-Apr 1W chg 1M chg
(bps) (bps)
iTraxx Asiax IG 104 2 -21 Brent Crude Spot ($/bbl) 102.75 -4.78% -16.61%
iTraxx SovX APAC 24 1 -12 Gold Spot ($/oz) 1,922.07 -0.79% -3.81%
iTraxx Japan 59 0 -12 CRB 293.14 -2.71% -3.65%
iTraxx Australia 82 1 -17 GSCI 713.61 -1.46% -11.21%
CDX NA IG 68 0 -9 VIX 22.1 14.33% -39.37%
CDX NA HY 105 0 1 CT10 (%) 2.583% 24.45 80.91
iTraxx Eur Main 76 3 -11
iTraxx Eur XO 362 24 -57 AUD/USD 0.748 -0.07% 2.19%
iTraxx Eur Snr Fin 87 6 -15 EUR/USD 1.091 -1.45% 0.49%
iTraxx Eur Sub Fin 165 12 -33 USD/SGD 1.360 -0.43% 0.11%
iTraxx Sovx WE 5 1 -2 AUD/SGD 1.017 -0.35% -2.03%
USD Swap Spread 10Y 4 -3 -4 ASX 200 7,438 -0.82% 5.68%
USD Swap Spread 30Y -21 -1 9 DJIA 34,497 -2.08% 5.12%
US Libor-OIS Spread 16 -9 -6 SPX 4,481 -2.64% 6.67%
Euro Libor-OIS Spread 2 -1 3 MSCI Asiax 726 0.16% 3.80%
HSI 21,791 -1.98% 3.48%
China 5Y CDS 64 2 -1 STI 3,405 -0.10% 6.82%
Malaysia 5Y CDS 69 3 -14 KLCI 1,602 0.92% 1.87%
Indonesia 5Y CDS 89 4 -37 JCI 7,123 0.73% 3.70%
Thailand 5Y CDS 40 2 -7 EU Stoxx 50 3,825 -3.40% 8.90%
Australia 5Y CDS 16 0 0 Source: Bloomberg
Page 3OCBC TREASURY RESEARCH
Asian Credit Daily
New Issues
▪ ORIX Corp priced a USD500mn 10-year senior unsecured bond at T+145bps, tightening from an IPT of
T+170bps area.
▪ Shinhan Bank Co Ltd priced a USD500mn 10NC tier II subordinated Climate Bonds Initiative certified
green bond at T+185bps, tightening from an IPT of T+225bps area.
▪ Jera Co. has arranged investor calls commencing 6 April for its proposed USD 5-year senior unsecured
fixed rate bonds.
▪ Power Construction Corp. of China has arranged investor calls commencing 6 April for its proposed
USD subordinated perpetuals offering.
▪ Yangzhou Economic & Technological Development Zone Development Group Co. has arranged
investor calls commencing 6 April for its proposed USD senior green bonds offering.
▪ Xi’an Municipal Infrastructure Construction Investment Group Corp. has arranged investor calls
commencing 6 April for its proposed USD senior unsecured bonds offering.
Date Issuer Size Tenor Pricing
6-Apr-22 ORIX Corp USD500mn 10-year T+145bps
6-Apr-22 Shinhan Bank Co Ltd USD500mn 10NC T+185bps
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 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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