AsianBondsOnline Newsletter (14 November 2011)

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To read the full report, data and graphs go to http://www.asianbondsonline.adb.org/newsletters/abowdh20111114.pdf?src=wdh&id=Vd7k9wdkOhnXujvrtQLVzHQl3Ygf9j

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News Highlights – Week of 7 – 11 November 2011

Bank Indonesia (BI) decided last week to cut its benchmark interest rate by 50 basis points (bps), bringing the BI rate to a record-low 6.0%. The Republic of Korea and Malaysia decided to keep their policy rates unchanged. The Bank of Korea left its 7-day repurchase rate at 3.25% while Bank Negara Malaysia held its benchmark overnight policy rate at 3.0%. Deepening turmoil in Europe and the global economic slowdown have shifted the policy focus of the region’s central banks from containing inflationary risks to sustaining domestic growth.

*In the People’s Republic of China (PRC), consumer price inflation eased for the third consecutive month to 5.5% year-on-year (y-o-y) in October from 6.1% in September due to a decline in food prices. At the same time, producer prices grew 5.0% y-o-y in October from 6.5% in September due to a decline in production material prices. Retail sales and industrial production growth also slowed in October to 17.2% and 13.2% y-o-y, respectively.

*Hong Kong, China’s gross domestic product (GDP) growth eased to 4.2% y-o-y in 3Q11 from 5.1% in the previous quarter. Indonesia’s GDP expanded 6.5% y-o-y in 3Q11, the same pace of growth recorded in 2Q11. Japan’s GDP grew at an annualized rate of 6.0% in 3Q11. Malaysia’s industrial production index rose only 2.5% y-o-y in September compared with a revised increase of 3.7% in August. Meanwhile, core machinery orders in Japan fell 8.2% month-on-month (m-o-m) in September and manufacturers expect a further drop in 4Q11.

*Last week, Fitch Ratings affirmed the Republic of Korea’s foreign currency (FCY) long-term issuer default rating at A+ and revised its outlook from stable to positive. The rating agency also affirmed its local currency (LCY) long-term issuer default rating at AA with a stable outlook.

*The PRC posted its lowest rate of export growth in 8 months at 15.9% y-o-y in October, while import growth accelerated to 28.7%, resulting in the monthly trade surplus declining to US$17.0 billion. In the Philippines, exports declined 27.4% y-o-y in September to reach their lowest level since April 2009. Indonesia posted a balance of payments deficit of US$4.0 billion in 3Q11 from a surplus of US$11.9 billion in 2Q11, while its current account remained positive at US$0.2 billion.

*Malaysia’s national mortgage corporation, Cagamas Bhd, issued MYR1.0 billion in medium-term notes (MTNs) last week. Pengurusan Air sold MYR430 million worth of 10-year Islamic MTNs that carry an annual profit rate of 4.16%. Meanwhile, Singapore’s Ascott Capital sold SGD200 million of 5-year bonds at 3.8% last week and Straits Trading issued SGD225 million of 5-year notes at 4.3%. Lafarge Shui On Cement issued its first CNH bonds last week. The CNH1.5 billion 3-year bonds carry a coupon of 9.0%.

*Korea Finance Corp. priced US$750 million worth of 10-year bonds at a coupon rate of 4.625%. Proceeds from the bond sale will be used for the corporation’s foreign currency lending and general operations. Also, Korea Development Bank plans to start a program to issue up to MYR3.5 billion of Islamic and conventional bonds in Malaysia.

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

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AsianBondsOnline is an ASEAN+3 initiative, supported by the Asian Development Bank and funded by the Government of Japan. It offers easy, centralized access to information about the region’s rapidly developing bond markets. The website contains essential data on current market activities, the legal and regulatory framework of each market, and monitors government policies and initiatives affecting the industry.

It covers the 13 markets listed above and the Asian regional market. The Office of Regional Economic Integration of the Asian Development Bank developed and maintains AsianBondsOnline.

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http://asianbondsonline.adb.org/index.php?src=wdh&id=Vd7k9wdkOhnXujvrtQLVzHQl3Ygf9j

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Thanks/BD

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