Asian Bonds Online Newsletter (9 May 2011)

News Highlights - Week of 2 - 6 May 2011

Consumer price inflation surged in the Philippines and Thailand in April, while slowing in Indonesia and the Republic of Korea. Consumer price inflation in Singapore was steady in March. Inflation in the Philippines accelerated to 4.5% year-on-year (y-o-y) in April-the highest rate in 12 months-due to higher fuel, electricity, and water prices. Thailand's consumer price inflation accelerated to a 15-month high of 4.04% y-o-y in April on the back of higher food prices caused by unstable weather. Meanwhile, consumer price inflation in Indonesia and the Republic of Korea eased in April to 6.2% and 4.2% y-o-y, respectively, on account of lower food prices. In Singapore, consumer price inflation remained unchanged at 5.0% y-o-y in March.

Malaysia, the Philippines, and Thailand raised their respective overnight policy rates by 25 basis points each, while Viet Nam raised its rate by 100 basis points,

on the back of increased inflationary pressures. Bank Negara Malaysia (BNM) hiked its overnight policy rate to 3.0% from 2.75% and raised the statutory reserve requirement ratio by 100 basis points to 3.0%. Bangko Sentral ng Pilipinas (BSP) raised its reverse repurchase facility to 4.5% and the repurchase facility to 6.5%. The Bank of Thailand (BOT) raised its 1-day repurchase rate to 2.75%. The State Bank of Vietnam (SBV) raised its reverse repurchase rate to 14.0% and its discount and refinancing rates to 13.0% and 14.0%, respectively.

Indonesia's economy expanded 6.5% y-o-y in 1Q11, down slightly from 6.8% in 4Q10, boosted by household consumption. Except for mining and financial services, all major industry sectors posted lower annual growth in 1Q11 compared with the previous quarter.

Last week, MIE Holdings Corp, a People's Republic of China (PRC) oil company, raised USD400 million from the issuance of a 5-year non-call three bond. Hong Kong, China issued HKD2.5 billion worth of 5-year bonds at an average yield of 1.647%.

In Indonesia, a total of IDR50 billion worth of LCY government bonds were exchanged for a new 15-year bond. Hong Leong Bank of Malaysia sold MYR1.0 billion worth of 10-year Lower Tier 2 notes and MYR1.4 billion of 60-year Tier 1 stapled securities. In the Philippines, Ayala Corporation priced its 10-year PHP10.0 billion puttable bond at 6.8%, and Rockwell Land raised PHP4.0 billion in 7-year notes.

In the PRC, the China Qinfa Group has mandated UBS as its book runner for a 5-year USD-denominated bond that will be callable after 3 years. China Liansu Group plans to issue a USD300 million 5-year non-call bond. In Malaysia, KPJ Healthcare Bhd. may raise up to MYR500 million from its Islamic Commercial Paper/Islamic Medium-Term Note Programme. 

Net foreign investment in the Republic of Korea's LCY bonds climbed to KRW1.13 trillion in April from KRW996 billion in March. The largest net investments by country were from Germany, Malaysia, and the PRC.

Government bond yields fell last week for most tenors in the PRC; Hong Kong, China; and the Republic of Korea, while yields rose for all tenors in the Philippines and most tenors in Indonesia, Malaysia, Thailand and Viet Nam. Yield movements were mixed in Singapore. Yield spreads between 2- and 10- year maturities widened in the PRC and Indonesia, while spreads narrowed in most other emerging East Asian markets. 


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