SGD Rates Weekly 30Jul12

 

SGS	23-Jul	30-Jul	change	IRS	23-Jul	30-Jul	change	BASIS	23-Jul	30-Jul	change
2Y	0.15	0.15	(0.00)	2Y	0.43	0.49	0.06	2Y	(13.25)	(12.00)	1.25
5Y	0.37	0.42	0.04	5Y	0.77	0.88	0.11	5Y	(38.25)	(34.75)	3.50
10Y	1.32	1.38	0.07	10Y	1.55	1.68	0.13	10Y	(44.00)	(42.00)	2.00
15Y	1.59	1.65	0.06	15Y	1.99	2.14	0.15	15Y	(57.00)	(57.00)	–
20Y	1.92	1.99	0.07	20Y	2.40	2.55	0.16	20Y	(65.00)	(65.00)	–
30Y	2.26	2.32	0.06	30Y	2.60	2.75	0.15

USD/SGD 1.2472(-0.0140) approx 181 bp Above NEER (prev  129 ABOVE). 

6M SOR 0.48106 – 0.51551%

SGS Inflow Outflow (-5/+5) : -1

Auctions

MAS 28 Day Bill SGD 1.2 bio (unch) cut off 0.15% (-5 BP)
MAS 3M Bill SGD 1.8 bio (+200) cut off 0.20%  (-5 BP)
SGS 3M bill SGD 3 bio (unch)  cut off 0.20% (+3bp)
N708100S Jul 2015 Reopening Auction SGD 2.1 bio. Cut off 0.23%.

Economic Data

Jun CPI yoy +5.3% vs exp +5.1%. Mom 0% vs exp -0.1% Jun Ind Prod +7.6% yoy vs exp 2.8%. +3.9% mom vs exp -0.8%

IRS : Rates bounced off their last Monday’s historic lows,recovering strongly into the later half of the week after an assuring MAS Annual Report on Wed which propelled USD/SGD to its strongest vs the NEER basket this year. SGD fwds however, rose in line with the rallying EDs  for a firmer SOR that kept the short end irs firmly supported. Worth noting are the strong bids in the >3Y tenors suggesting alot of players taking off carry trades and bond portfolio hedging activity. Rates closed the week 6 to 16 bp higher, on a steeper curve.

Comment : Market positioning appears light at the moment with little impetus to trade in the absence of a compelling trend. The MAS Annual Report signalled a slowdown to come for 2H12 along with inflation on the higher end of the forecast zone. That questions the current  SGD strength which could also be partly attributed to a bidding war for the Tiger Beer brand. SGD 3-5Y rates have overtaken the USD irs curve again in the past 2 days of trading which is good to note. As for me, I am saving up some bullets for potential pain trades when the last of the carry traders call it a day.

SGS : Profit taking theme again although volumes were light. Market stubbornly supported prices into the 3Y reopening on Friday where the cut off was a very enthusiastic yield of 0.23%, just shy of all the bills issuances’ cut offs. Long end papers still very supported, particularly the >10Y on expectations of month end duration extension this week. Yields closed the week unchanged to 7 bp higher, on a steeper curve.

Comment : Market clearly still on hoarding mode, with good reason too. Bonds appear in short supply as deposit bases grow and Singapore revels in its safe haven status. I am squared in bonds and will remain squarish and looking out for potential bond swap spreads at lower levels.

Corporate Bonds

SWIBER 1Y 5.8% SOR+535 BP.  SGD 150 MIO.~ strange that nobody is asking why this is their 3rd consecutive issue in 3 months.

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SGD Rates Trading Weekly 23Jul12

SGS	16-Jul	23-Jul	change	IRS	16-Jul	23-Jul	change	BASIS	16-Jul	23-Jul	change
2Y	0.14	0.15	0.02	2Y	0.44	0.43	(0.01)	2Y	(15.25)	(13.25)	2.00
5Y	0.36	0.37	0.01	5Y	0.83	0.77	(0.06)	5Y	(42.00)	(38.25)	3.75
10Y	1.34	1.32	(0.03)	10Y	1.62	1.55	(0.07)	10Y	(45.38)	(44.00)	1.38
15Y	1.60	1.59	(0.01)	15Y	2.11	1.99	(0.12)	15Y	(57.00)	(57.00)	–
20Y	1.95	1.92	(0.03)	20Y	2.46	2.40	(0.06)	20Y	(70.00)	(65.00)	5.00
30Y	2.30	2.26	(0.03)	30Y	2.66	2.60	(0.06)

USD/SGD 1.2612(-0.0037) approx 129 bp Above NEER (prev 92 ABOVE). 

6M SOR 0.45916 – 0.51408%

 SGS Inflow Outflow (-5/+5) : -1

 Auctions

MAS 28 Day Bill SGD 1.2 bio (unch) cut off 0.15% (-5 BP)
MAS 3M Bill SGD 1.8 bio (+200) cut off 0.20%  (-5 BP)
SGS 3M bill SGD 3 bio (-1 bio)  cut off 0.18% (+3 bp)
SGS 6M bill SGD 2 bio cut off 0.19% (-4 bp)

 Economic Data

Jun NODX +6.8% yoy vs exp 2%. +6.7% mom vs exp +2.3%.

Jun Electronics Exports +1.6% yoy vs exp +4%

 IRS :
Historic lows today in the 5Y to 15Y irs. The rest of the curve still have last year’s -ve fixing episodes on their side. Local banks showing their dominance in past 3 days and keeping rates from free falling as the 6M SOR fixings trade in their new range on a lower USD/SGD, mainly driven by the acquisition of Tiger beer story. Rates closed the week 1 to 12 bp lower, the 15Y underperforming as least defended point on probably lack of market positioning.

 Comment : Negative carry with the 6M inverted against the 2Y for an entire month now. Thus it is no surprise the short end is seeing better bids on just market fatigue. As for the rest of the curve, liquidity is luxury, with most of the market sidelined and local banks on the prowl. Still hearing deal pricings in pipeline which would make it too tough to call with the 2-5Y at 30 bp and 5-10Y at 80 bp, it almost feels like a recession call.

 SGS :
Profit taking for most of the week with small pockets of demand coming from foreign banks for the long end 20-30Y as well as the belly 2019-2021 papers.  The long end outperformed on market shorts with the 30Y breaking historic low in yields almost everyday and again today at 2.27%. Short end bills appears to be where the SGD is gravitating to with all the bill auctions last week cutting off no higher than 0.20%. The SGS Jul 2015 reopening was announced at SGD 2.1 bio on Fri, a none too alarming number.  Yields closed the week +2 to -3 bp changed, on a flatter curve.

 Comment : Market has hit a wall and taking a breather before we head to zero yields. Yields buffered at the moment with some pretty aggressive deposit drive campaigns in the market involving local banks too. In addition we have had several billion worth of corporate issuance flooding the street and more to come, or so we hear. Still see little upside for bonds at current levels and the situation is likely to remain status quo for the time being and the auction this Friday should be a non event with yield levels around 0.24% (vs bank fixed deposits at 0.70% ?).

 Basis swaps hit by short covering and carry bug. The market was better bid for the entire week especially in the 3 to 5Y tenors. No fears of new issuance at the moment.

 CORPORATE BONDS

MAPLETREE SGD PERPETUAL (UNRATED) CAPITAL SECURITIES NC 5Y.  Final cpn  5.125%(vs initial 5.625%). 10Y+365 BP SGD 600 MIO.

 LEND LEASE FINANCE LTD (BBB-/Baa3 stabl)e. 5Y. Final Size SGD 275 mio. Cpn 4.625% (SOR+380 bp)

 Hearing in Pipeline

DBS SGD Sub debt.

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SGD Rates Weekly 16Jul12

SGS	9-Jul	16-Jul	change	IRS	9-Jul	16-Jul	change	BASIS	9-Jul	16-Jul	change
2Y	0.14	0.14	(0.00)	2Y	0.50	0.44	(0.06)	2Y	(13.50)	(15.25)	(1.75)
5Y	0.38	0.36	(0.02)	5Y	0.92	0.83	(0.09)	5Y	(37.50)	(42.00)	(4.50)
10Y	1.44	1.34	(0.09)	10Y	1.75	1.62	(0.13)	10Y	(42.25)	(45.38)	(3.13)
15Y	1.74	1.60	(0.14)	15Y	2.27	2.11	(0.16)	15Y	(57.00)	(57.00)	–
20Y	2.06	1.95	(0.11)	20Y	2.63	2.46	(0.17)	20Y	(62.50)	(70.00)	(7.50)
30Y	2.45	2.30	(0.15)	30Y	2.85	2.66	(0.19)

USD/SGD 1.2649(-0.0069) approx 92bp Above NEER (prev 49 ABOVE). 

 6M SOR 0.48446-0.57488%

 SGS Inflow Outflow (-5/+5) : +2

 Auctions

MAS 28 Day Bill SGD 1.2 bio (unch) cut off 0.20% (-5bp)
MAS 3M Bill SGD 1.6 bio (+400) cut off 0.25%
SGS 3M bill SGD 3 bio (-1 bio)  cut off 0.15% (-5bp)

Economic Data

2Q12 GDP -1.1% qoq vs exp +0.6% +1.9% yoy vs exp 2.3%
May Retail Sales +0.5% yoy exp +2.6%. -2.7% mom vs exp -0.8%/
May Retail Sales ex Auto +0.7% vs exp +1.8%

 IRS :
Another week of new historic lows. The 10Y irs traded at 1.60% on Friday and closed 1.59% mid, lowest close in history. Fwds started the week well bid before coming off to fix today at 0.48446%, under the 0.5% handle. Flows continue to dominate in an otherwise quiet marketplace with spec accounts leading the charge in flattening the curve with very little resistance. Rates closed the week 6 to 19 bp lower, on a flatter curve for the 2nd consecutive week.

 Comment :
The fear of inflows was acknowledged by the Prime Minister on 10 July. It coincides with Aug, one year after the markets endured a period of negative fixings that threatened the stability of the derivatives market. On that note, it is probably time for some consolidation even as deal pricings start to flood the markets as we have moved into the oversold territory. Given the soft and slightly dismal GDP data for 2Q, the only booster for USD/SGD would be CPI for any hope of a bullish Oct MPC.

 SGS :
Further rally of 2 to 15 bp in the bonds, following the same pattern beginning with a morning scare and short covering throughout the day on very thin liquidity. Volumes much lighter than the week before as the buying intensity dwindled as the momentum exhausted not before the 30Y SGS hit a new historic low of 2.29% and the 20Y at 1.93%.

 Comment :
A 35 bp rally in 2 weeks on lack of market moving news could only be attributed to a market  change-of-heart ? By now, the people who have missed out would have given up and the  people who have held out would have sensibly cut loss and the people who have hoarded would be starry eyed for the 2% handle in the 30Y. The only bond in the curve with a 2% handle is the 30Y and its yield is realistically under even core CPI. I am squared in SGS because even bond swap spreads are too tough to call. New corporate issuance expected should pressure market appetite going ahead, particularly if they are of a quasi sovereign or swf nature.

 Corporate Bonds

Olam Interntional Limited 7Y 6% final cpn 5.8% SGD 350 mio. ~ likely to be swapped into USD

 VTB Bank Baa1/BBB. SGD 400 mio. 3Y 4% (SOR+340 bp).~likely to be swapped into USD

 Hearing in Pipeline

LEND LEASE FINANCE LTD BBB-/Baa3 stable. 5Y SGD Benchmark SGD 250-300 mio.

Temasek 10Y and 30Y USD issue.

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SGD RATES TRADING WEEKLY 9JUL12

 

SGS	2-Jul	9-Jul	change	IRS	2-Jul	9-Jul	change	BASIS	2-Jul	9-Jul	change
2Y	0.14	0.14	(0.00)	2Y	0.52	0.50	(0.02)	2Y	(13.00)	(13.50)	(0.50)
5Y	0.40	0.38	(0.02)	5Y	1.02	0.92	(0.10)	5Y	(37.00)	(37.50)	(0.50)
10Y	1.59	1.44	(0.16)	10Y	1.88	1.75	(0.13)	10Y	(42.50)	(42.25)	0.25
15Y	1.90	1.74	(0.16)	15Y	2.41	2.27	(0.13)	15Y	(57.00)	(57.00)	–
20Y	2.25	2.06	(0.19)	20Y	2.78	2.63	(0.16)	20Y	(64.00)	(62.50)	1.50

 

USD/SGD 1.2718(+0.0038) approx 49bp Above NEER (prev 34 ABOVE). 
6M SOR 0.51831-0.55967%
SGS Inflow Outflow (-5/+5) : +3

 Auctions

MAS 28 Day Bill SGD 1.2 bio (unch) cut off 0.25% (+5bp)
MAS 3M Bill SGD 1.2 bio (unch) cut off 0.25%
SGS 3M bill SGD 3 bio (-1 bio)  cut off 0.20% (unch)
SGS 6M bill SGD 2 bio (inaugural issue)  cut off 0.23% 

Economic Data

Jun PMI 50.4 exp 50.1. Electronics Sector Index 50.4 exp 50.5

IRS : Sharp flattening in the curve on  as rates spiralled lower in the course of the week driven mainly by local banks selling in the 5Y on news of 2 chunky corporate issuances in local bank sub debt and perpetual and also an aggressive post month end rally in the SGS. Rest of market joiined in the fray which speculated rate lock hedging and 5Y interest rate caps. Short end was supported by 6M SOR fixing which held up in line with the USD/SGD. Intraday volatility resulted in illiquid conditions and gappy prices into a quiet Friday ahead of the US Non Farm resulted in hedge fund heaven with all manners of exotic spreads queried, distorting the curve further.  Rates closed the week 2 to 16 bp lower, on a flatter curve.

Comment : It looks like there is more to come. Local banks not showing their full hand which makes it difficult to anticipate when the next wave is due. The 50day moving averages have been rejected for the >3Y and it suggests to me, as we head into Aug, that SOR has potential to come off once we pass the 1st fortnight of July when sgd fwds are paid up to cross the year end.

SGS : Explosive action in the bond markets with a sustained rally over 2 weeks. Local bank kicked started the buying in the 30Y SGS after issuing SGD 1.2 bio of sub debt leading to a ferocious rally of over 10 bp in 1 day and historic lows in the 15Y and 30Y SGS. The panic throughout the week, fuelled by news that the Singapore insurance benchmarking would be extended to the 30Y benchmark. The tsunami ended the week with yields unchanged to 19 bp lower, on a flat curve.

Comment : Was wrong on the latent market appetite for papers. The sub debt issuance basically put a loaded gun into the hands of the local bank with a bigger balance sheet for papers. Singapore yields are still looking rich (ignoring CPI) at current levels and it would not do to be short with invisible hands guiding the market.

Corporate Bonds

UOB 10Y NC 5 sub debt rated Aa2/A+ SGD 1.2 bio final cpn 3.15%. Books over 2 times oversubscribed. Initial price guidance 3.3%.

OCBC 5Y NC Perp rated A3/BBB+ SGD 1 bio 4% cpn. Initial price guidance 4.25%.

 

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SGD Rates Trading Weekly 2Jul12

SGS	25-Jun	2-Jul	change	IRS	25-Jun	2-Jul	change	BASIS	25-Jun	2-Jul	change
2Y	0.15	0.14	(0.01)	2Y	0.50	0.52	0.02	2Y	(13.50)	(13.00)	0.50
5Y	0.46	0.40	(0.06)	5Y	1.02	1.02	(0.00)	5Y	(39.75)	(37.00)	2.75
10Y	1.64	1.59	(0.05)	10Y	1.88	1.88	(0.00)	10Y	(44.25)	(42.50)	1.75
15Y	1.93	1.90	(0.03)	15Y	2.42	2.41	(0.02)	15Y	(57.00)	(57.00)	–
20Y	2.26	2.25	(0.01)	20Y	2.79	2.78	(0.00)	20Y	(65.00)	(64.00)	1.00
30Y	2.64	2.63	(0.01)	30Y	2.99	3.00	0.02

USD/SGD 1.2680 (-0.0135) approx 34 bp Above NEER (prev 6 ABOVE). 

6M SOR 0.51609-0.5617%

SGS Inflow Outflow (-5/+5) : +2

Auctions

10Y SGS REOPENING SGD 2 BIO (MAS 400 MIO) CUT OFF 1.60% PRE AUCTION 1.615% MID.

MAS 28 Day Bill SGD 1.2 bio (unch) cut off 0.20% (unch) SGS 3M bill SGD 4 bio cut off 0.29% (+4 bp)

Economic Data

May Ind Prod +6.6% yoy vs exp +6.1%, +1.8% mom vs +2.6% exp

IRS : All eyes on the sgd fwds which peaked at 0.5617% mid week before USD/SGD collapsed on Friday. Interest seen in curve flattening with the belly 3-5Y  holding up well while the long ends saw little trading interest except for the odd seller on USD vs SGD 5y5y fwd convergence play. Long ends came back to life on Friday on risk on sentiments, resteepening the curve after 4 days of flattening. On the week, we have rates +3 to -2 bp changed, the 5Y and 10Y unchanged on month end inactivity.

Comment : The curve trying to hold at the 50 day moving average line, the 10Y irs looking the most vulnerable. It is difficult to call a trend with the 6M SOR trading in its challenging range for the last month. It would be tempting to chart a downtrend into July for the 6M fwds with the 0.60% a convincing cap for the past 3 months. Good way to play the 10Y vulnerability would be to pay the 2-5-10Y butterfly which has been trapped in the -0.30 to -0.40% range for the past month.

SGS : Good run up in bonds into an inverted auction result. The 10Y reopening was cut off lower than its pre auction levels suggesting deep pockets of latent demand into the half year end. Bonds saw consistent buying interest throughout the week with the only losers, the old 10Y and Sep 2020 which both closed unchanged. The Sep 2022 and 2016 papers saw decent buying from index players and real money accounts for the curve to close 1 to 6 bp lower.

Comment : Limited upside in prices for the time being. The 10Y auction netted a small windfall for MAS, squeezing the market on the yields on small supply. Looks like not many people are sitting on shorts or short portfolio durations after the gyrations of last month. Would be interesting to see if any indigestion occurs.

Corporate Bonds

Swiber 4Y SGD 75 mio 7% (SOR+618 bp) – expect PBs to reap “decent rebate” for selling this !!

LMIRT Capital Guaranteed by Lippo Malls Indonesia Retail (definitely PB rebate bond) 3Y SGD 200 mio 4.88% (SOR+425 bp) 5Y SGD 50 mio  5.875%(SOR+485bp) CDL 10Y 3.75% 100 mio (SOR+185) – riding on Fraser’s success the week before.

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