EM ASIA CREDIT: Bank Tabungan Negara: Ratings affirmed, BCA downgrade
(BBTNIJ, Baa2/-/-)
"*MOODY'S RATINGS AFFIRMS BANK TABUNGAN NEGARA'S Baa2 RATINGS," - BBG
Moody's affirmed the rating of Bank Tabungan Negara (BBTNIJ) overnight at Baa2, Stable outlook. The rating currently has a 3-notch uplift to its Baseline Credit Assessment (BCA), which was downgraded to ba2.
The agency notes that provisioning looks too low versus its high risk asset base. That said, the Baa2 rating was affirmed based on expected support from the Government of Indonesia (Baa2 stable) if and when required.
BBTNIJ mandated banks back in March for a new $ 5y Tier 2 bond, but subsequently pulled the deal due to market volatility. Indonesian $ bond spreads have retraced most of the March/April weakness, which may encourage issuers to return. There are no USD bonds currently outstanding.
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CHINA: Hard to See Significant Tariff Impacts in April Data
- April data releases showed limited impact from the trade war.
- April retail sales did decline to +5.1% (from +5.9% in March) yet remains above the 1 year average of +3.6% and the 5 year average of +4.5%.
- In what could be front running tariffs, industrial production beat expectations rising +6.1%, ahead of forecasts of +5.7%
- Investments in Fixed Assets (excluding rural households) rose +4.0%, moderately lower than March's result of +4.2%
- The ongoing malaise in the property sector shows limited signs of improving (as witnessed by the release of home prices earlier today) with the April Property Investment YTD YoY printing at -10.3% where it has remained since 2023.
- Residential property sales YTD YoY declined -1.9%, higher than March's result of -0.4%
- China's surveyed jobless rate was steady at +5.1%
AUSSIE BONDS: Subdued Session Ahead Of Tomorrow's RBA Policy Decision
ACGBs (YM -1.0 & XM -3.0) are modestly cheaper on a data-light Sydney session ahead of tomorrow’s RBA Policy Decision.
- Cash US tsys have twist-steepened in today’s Asia-Pac session, with yields 2.5bps lower to 2.5bps higher, as the market continues to digest late Friday news that Moody's Ratings downgraded the US credit score.
- “The move follows downgrades by Fitch Ratings and S&P Global Ratings, with Moody's citing a decline in fiscal metrics that can no longer be counterbalanced by the US' economic and financial strengths." (per BBG)
- Cash ACGBs are 1-3bps cheaper with the AU-US 10-year yield differential at flat.
- The bills strip little changed.
- RBA-dated OIS pricing is little changed across meetings today. A 25bp rate cut in May is given a 94% probability, with a cumulative 76bps of easing priced by year-end (based on an effective cash rate of 4.09%).
- (AFR) “The consumer price index for the March quarter was a good enough result to warrant a 25 basis point policy rate cut at the May Reserve Bank board meeting, but that is about it.” (see BBG link)
- This week, the AOFM plans to sell A$1200mn of the 4.25% 21 December 2035 bond on Wednesday and A$800mn of the 2.75% 21 November 2028 bond on Friday.
MNI: CHINA APR INDUSTRIAL OUTPUT +6.1% Y/Y VS MEDIAN +5.7% Y/Y: NBS
- CHINA APR INDUSTRIAL OUTPUT +6.1% Y/Y VS MEDIAN +5.7% Y/Y: NBS
- CHINA JAN-APR INDUSTRIAL OUTPUT +6.4% Y/Y VS JAN-MAR +6.5% Y/Y
- CHINA APR RETAIL SALES +5.1% Y/Y VS MEDIAN +5.9% Y/Y
- CHINA JAN-APR RETAIL SALES +4.7% Y/Y VS JAN-MAR +4.6% Y/Y
- CHINA YTD FIXED-ASSET INVESTMENT +4.0% Y/Y VS MEDIAN +4.2% Y/Y
- CHINA YTD PROPERTY INVESTMENT -10.3% Y/Y VS MEDIAN -10.0% Y/Y
- CHINA APR UNEMPLOYMENT RATE +5.1% VS MAR +5.2%
