kis weekly 337 eng weekly 337_eng.pdfwon), lg telecom 67 (140 billion won), taeyoung construction 43...
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KIS Weekly
KIS Pricing Inc.
Rate changes in bond indices 2 KTB & MSB Market Overview 3 Bank Bonds and Other Fin. Debentures 6 Corporate Bond Market Overview 8
Swap Market Overview
13
ELS Market Overview 15
This document is for our clients only. Other than disclosures relating to KIS Pricing, it is based on credible information, but we do not
represent it is accurate or complete, and it should not be relied on as such. Therefore, we are not liable to any investment activities
that are based on this document. More information is available at bond.co.kr and our investment portfolio management tool, KIS-Net.
Kyle Huh (02-3215-1477), Sohyoung Park (02-3215-1458) No. 337, 7th Sept., 2009
2 No. 337, 7th September, 2009
KIS
Weekly
Rate Changes in Bond Indices
Spot Curve by bond type Swap Spread between KTB
Hankyung-KIS-Reuters, KOBI30, KOBI120 (Call reinvest index)
Market value weighted average YTM by type Bond Index Duration
1.50
2.50
3.50
4.50
5.50
6.50
7.50
8.50
0 2 4 6 8 10
KTBKEPCO
KDBCorp(AA-)
0.00
0.50
1.00
1.50
2.00
2.50
3.00
3.50
4.00
4.50
5.00
07-03 07-17 07-31 08-14 08-28-40
-35
-30
-25
-20
-15
-10
-5
0
KTB 3yrSwap 3yr Spread
145
150
155
160
165
170
175
07-03 07-17 07-31 08-14 08-28
All KTB MSB
Corp KOBI30 KOBI120
1.50
2.00
2.50
3.00
3.50
4.00
4.50
5.00
5.50
6.00
07-03 07-17 07-31 08-14 08-28
All KTB
MSB Corp
KOBI30 KOBI120 0.70
1.20
1.70
2.20
2.70
3.20
3.70
4.20
07-05 07-19 08-02 08-16 08-30
All KTBMSB CorpKOBI30 KOBI120
3 No. 337, 7th September, 2009
KIS
Weekly
KTB & MSB Market Overview
■ KTB & MSB l Last week, yield on 3yr and 5yr KTBs dropped by 5bps to 4.30% and 9bps to
4.79%, respectively. That on 10yr also edged down by 9bps to 5.35%.
l Last week, the spread between 3yr and 5yr KTBs tightened to 49bps but that
between 5yr and 10yr remained at 56bps.
l Industrial Production Index in July was 0.7% higher than a year ago, showing
positive sign for first time in ten months. However, consumer price index in
August also 2.2% higher than a year ago, which affected the KTB market
somewhat negatively.
l Foreign investors’ buying up of KTB Futures, coupled with the U.S. Treasury
down, helped the strong KTB market despite some recovery signs of local
economic indicators.
l Last week, yield on 1yr MSB closed the week down by 5bps to 3.44% and that
on 2yr also declined by 2bps to 4.31%.
l With CD rates unchanged through the week, foreign investors’ picking up of
1yr MSBs led the bull market. Showing especially bearish mood for 1yr MSBs,
the spread between 1yr and 2yr MSBs closed the week narrowly up to 87bps,
which conspicuously compared to 112bps for last July.
[Fig.1] Change in yield by bond type
2
2.5
3
3.5
4
4.5
5
5.5
20090102 20090217 20090331 20090514 20090625 20090806
KTB 1yr KTB 2yr KTB 3yr
KTB 5yr KTB 10yr
4 No. 337, 7th September, 2009
KIS
Weekly
[Fig.2] Change in yield by bond type
2
2.25
2.5
2.75
3
3.25
3.5
3.75
4
4.25
4.5
20090102 20090217 20090331 20090514 20090625 20090806
MSB 1yr MSB 2yr
[Fig.3] KTB SPREAD
20
30
40
50
60
70
80
90
100
110
120
20090102
20090123
20090217
20090310
20090331
20090421
20090514
20090604
20090625
20090716
20090806
20090827
(bp)5_3 SPREAD 10_5 SPREAD
[Fig.4] 3yr Credit SPREAD
50
55
60
65
70
75
80
85
90
95
100
20090629
20090713
20090727
20090810
20090824
SPECIAL BANK COPORATE
5 No. 337, 7th September, 2009
KIS
Weekly
[Fig.5] 5yr Credit SPREAD
40
50
60
70
80
90
100
110
120
20090629
20090713
20090727
20090810
20090824
SPECIAL BANK COPORATE
[Fig.6] KTB / MSB Trade Amt
0
5,000,000
10,000,000
15,000,000
20,000,000
25,000,000
30,000,000
3M 6M 1Y 2Y 3Y 5Y Over 5Y
(Mil)
KTB MSB Special
[Fig.7] Foreign Exchange Rate
1200
1250
1300
1350
1400
1450
1500
1550
1600
1650
20090102
20090116
20090203
20090217
20090303
20090317
20090331
20090414
20090428
20090514
20090528
20090611
20090625
20090709
20090723
20090806
20090820
20090903
JPY USD
6 No. 337, 7th September, 2009
KIS
Weekly
Bank Bonds and Other Financial Debentures
■ Bank
Bonds &
Others
l Yields on bank bonds showed no significant movement through the week
and remained fluctuating in the current level.
l Bank bonds spread, which significantly rose at the beginning of the week,
showed somewhat better stability and seemed to lose momentum to
rebound.
l 1yr and 2yr bank bonds spread rose by 6bps to 45bps and 9bps to 47bps,
respectively. 3yr spread also increased by 3bps to 82bps.
l Last week, local banks sold about 2.8 trillion won worth of bank debt,
which was mostly by KDB, IBK, Nonghyup, and Suhyup. Hana bank also
actively sold its bank debt from the previous week.
l In contrast to bank bonds, yields on other financial debentures
significantly dropped and exhibited the bull market. Especially, strong
demand for the AA0 rated, other financial debentures maturing around
1.5yrs led the downward trend.
l 1yr and 2yr other financial debentures spread dropped by 6bps to 107bps
and 7bps to 118bps, respectively. 3yr spread also declinded by 1bp to
150bps.
l With new issuance of other financial debentures totaling 440billion won,
the A0 rated debentures especially were leaning towards lower yields.
Change in Bank Bond AAA yield
2.563
3.473.88
4.314.74
4.935.14
5.445.75
2.56
3.023.48
4.32
4.78 4.935.12
5.415.7
3.89
1.41.7
22.32.62.93.23.53.84.14.44.7
55.35.65.96.26.5
3M 6M 9M 1Y 1.5Y 2Y 2.5Y 3Y 4Y 5Y Maturity
YTM(%)
2009-08-282009-09-04
7 No. 337, 7th September, 2009
KIS
Weekly
Change in Bank Bond AAA Credit Spread
0
30
60
90
120
150
180
210
240
270
300
330
360
390
08-10 08-12 09-02 09-04 09-06 09-08
Bank AAA 1yr - MSB 1yr,bpBank AAA 3yr - MSB 3yr,bp
Change in Credit Spread of Other Financial Debentures AA0
0306090
120150180210240270300330360390420450480510540
08-10 08-12 09-02 09-04 09-06 09-08
Other Fin. Debentures AA 1yr - MSB 1y r,bp
Other Fin. Debentures AA 3yr - KTB 3yr,bp
8 No. 337, 7th September, 2009
KIS
Weekly
Corporate Bond Market Overview
■ Primary
Market
The corporate bond market last week experienced a growth of 470 billion won,
with a total issuance amount of 790 billion won from Kia Motors 276-1 & 276-
2 (200 billion won), Shinsegae 119 (200 billion won), Komipo 14 (150 billion
won), LG Telecom 67 (140 billion won), Taeyoung Construction 43 (100 billion
won), and maturing amounts totaled 320 billion won from SK Energy 3 (150
billion won), SK Energy 10-2 (70 billion won ), Sungshin 141 (50 billion won),
Daewoo Motor Sales 30 (30 billion won).
For the upcoming week, new issues on schedule are LG Powercom 16-1 & 16-
2 (100 billion won), Asiana Airlines 61 (100 billion won), Samhwan 123 (70
billion won), Dongbu Steel 151-1 & 151-2 (50 billion won), GS Retail 29 (50
billion won), totaling 370 billion won. Maturing issues on schedule are Yukor
Car Carriers 1 (90 billion won), Dongbu Steel 127 (40 billion won), Hanwha
Resort 11 (30 billion won), totaling 160 billion won, leading to a net growth of
210 billion won.
[Figure 1] Corporate Bonds Issued and Matured (unit: 100m won)
9 No. 337, 7th September, 2009
KIS
Weekly
■ Secondary
Market
The corporate bond market last week didn’t exhibit any particular directional
momentum. The market was slightly leaning towards growth, with lower yields,
but with limited change. Total trading was at 1,255 billion won. A0 and AAA
rating corporate bonds traded at 298.9 billion won (23.8%) and 270 billion won
(21.5%), respectively. In addition, Hynix and Kumho Petrochemical (BBB rating
corporate) traded actively, covering 13.1% of the market at 164.7 billion won.
Specifically, among AAA rating corporate bonds, KB Financial Holdings,
Shinhan Financial Holding, Hana Financial Holdings, POSCO, KT, and Komipo
were active. In addition, among AA rating bonds, GS Caltex, SK, SK Energy,
Samchully, Woori Investment Securities, Kia Motors, Samsung Corporation, LG
Powercom, Korea Investment Holdings were active. Among A rated bonds, CJ
Homeshopping, SK Networks, Hite Beer, Korean Air, Hanjin Heavy Industries,
Hanwha Petrochemical, Hanjin Shipping, Hyundai Hysco were active. Total
trading (excluding new issuances) increased by 3.7% to 1,255 billion won, and
based on credit rat ing, A rating bonds covered 38.35, AA rating bonds covered
26.9% of the market. Corporate bonds under 1 year covered 30.5% of the
market, and those between 1~3 years represented 66.6% of the market.
[Figure 2] Corproate Bonds Trading (unit: 100m won)
10 No. 337, 7th September, 2009
KIS
Weekly
[Figure 3] Trading Activity Trend & Maturity-wise Weights (unit:%)
■Corporate
Bond Yields&
Spreads
With the Open Market Committee upcoming in September, corporate bond
yields maintained within its range without particular material events. However,
bond yields were on a downhill mainly due to the drop in US treasury yields.
Early in the week, industrial production indices, market leading indicators, and
other economic indicators performed well, causing a weak start for the bond
market, but the drop in US yields pull domestic bond yields back down. In
addition, foreign investors expanded their positions in KTB futures, further
adding momentum to the drop in yields.
As of the 4th, AAA 3-year corporate bond yields dropped by 2 bps to 5.08%,
which is a 3 bp increase to 78 bps above KTB, A corporate dropped 9 bps to
6.03%, which is a 4 bp drop against the KTB at 173 bps.
[Figure 4] AAA 3yr Credit Spread Trend (unit:%)
11 No. 337, 7th September, 2009
KIS
Weekly
[Figure 5]Weekly Average Yields (unit:%)
■Credit
Rating
Change
Credit rating of Ssamzie dropped from BB- to B+, and Excon dropped from B-
to CCC. For Ssamzie, the drop was due to the weakening of its fashion
accessory business and increase in uncertainty from the change in its majority
shareholder, in addition to financial uncertainty.
■Convertible
Bond Market
Due to the drop in stock indices from the change in fiscal policy (contraction) of
the Chinese government, the Korean market also started off the week falling
below 1,600 points. The index reached 1,623.06 points, the yearly high level,
during the week, but the volatility of the market soon ended up dropping the
Kospi index back to 1,608.9 points, which is a 0.96 point increase from the
previous week, and the Kosdaq dropped 1.37 points to 518.82 points.
For the previous week, Schnell Korea 6 BW, Tomboy 44 CB, and Inocell 3 CB
were issued. There were no conversion price refixings, and Estech Pharma 3
CB and Insprit 2 CB were converted.
12 No. 337, 7th September, 2009
KIS
Weekly
[Figure 7] Weekly Stock Market (unit:%)
■ Convertible
Bonds Trading
Significant convertible bond trading last week were as follows: KIA Motors
275BW (23.95 billion won), LG Innotek 22CB (7.02 billion won), LG Innotek
23BW (6.82 billion won), Kumho Industries 252BW (2.44 billion won), Kumho
Tire 10BW (1.9 billion won), Taihan Electric Wire 146BW (7.64 billion won),
Woongjin Holdings 39BW (3.96 billion won).
Parity levels of ITM bonds (those over 1.2) averaged 1.902, a small drop from
1.92 in the previous week.
[Figure 8] Junk Bonds Parity Trend (unit:%)
0
0.5
1
1.5
2
2.5
3
20080901 20081016 20081128 20090114 20090302 20090414 20090529 20090713 200908250
0.2
0.4
0.6
0.8
1
1.2
ITM(Left)ATM(right)
OTM(right)
*ITM(Parity above 1.2, ATM: Parity 0.8~1.2, OTM: Parity Below 0.8)
700
900
1100
1300
1500
1700
1900
20080901 20081127 20090227 20090527 20090820
KOSPI
08/28: 1607.9409/04: 1608.90
100
200
300
400
500
600
700
20080901 20081127 20090227 20090527 20090820
KOSDAQ
08/28: 520.1909/04: 518.82
13 No. 337, 7th September, 2009
KIS
Weekly
Swap Market Overview
Major Interest Rates and Weekly Changes
Major Interest Rates Weekly Changes
-1.70%
-0.70%
0.30%
1.30%
2.30%
3.30%
4.30%
5.30%
6.30%
7.30%
USD TB 3Y USDIRS 3YKRW CRS 3Y KRWIRS 3YKTB 3Y
-0.05% -0.04%
0.05%
-0.15% -0.14%-0.20%
0.00%
0.20%KTBKRW IRSKRW CRSUSD IRSUSD TB
KRW CRS Curve Trend KRW IRS Curve Trend
0.00%
0.50%
1.00%
1.50%
2.00%
2.50%
3.00%
3.50%
4.00%
4.50%
03M 09M 02Y 04Y 06Y 08Y 10Y
200812312009082820090904
2.00%
2.50%
3.00%
3.50%
4.00%
4.50%
5.00%
03M 09M 02Y 04Y 06Y 08Y 10Y
200812312009082820090904
IRS Spread Trend and Weekly Changes
IRS Spread Trend Weekly Changes
-0.40%
-0.30%
-0.20%
-0.10%
0.00%
0.10%
0.20%
0.30% KRWIRS 5Y-3Y
KRWIRS 10Y-5Y
0.01%
0.00%0.00%
0.00%
0.00%
0.01%
0.01%
0.01%
0.01%KRWIRS 5Y-3YKRWIRS 10Y-5Y
14 No. 337, 7th September, 2009
KIS
Weekly
Swap Basis Trend and Weekly Changes
Swap Basis Trend Weekly Changes
-6.50%
-5.50%
-4.50%
-3.50%
-2.50%
-1.50%
-0.50%
0.50%SWAP BASIS(1Y)SWAP BASIS(3Y)
-0.04%
0.09%
-0.10%
0.00%
0.10%SWAP BASIS(1Y)SWAP BASIS(3Y)
Bond/IRS Trend Weekly Changes
-1.20%
-0.70%
-0.20%
0.30%
0.80%SWAP SPREAD(1Y)SWAP SPREAD(3Y)
-0.05%
0.01%
-0.20%
0.00%
0.20%
SWAP SPREAD(1Y)SWAP SPREAD(3Y)
Major Yields Spread (unit: %)
Rates 2008/12/31 2009/08/28 2009/09/04 Weekly Change Yearly Change
US TREASURY 3y 0.90 1.56 1.41 -0.14 0.51
US IRS 3y 1.69 2.05 1.90 -0.15 0.21
KRW CRS 3y 2.00 2.85 2.90 0.05 0.90
KRW IRS 3y 3.29 4.20 4.16 -0.04 0.87
KTB 3y 3.40 4.35 4.30 -0.05 0.90
IRS 5-3y 0.08 0.18 0.19 0.01 0.11
Swap Basis 3y -1.29 -1.35 -1.26 0.09 0.03
Bond/IRS 3y -0.11 -0.15 -0.14 0.01 -0.03
15 No. 337, 7th September, 2009
KIS
Weekly
ELS Market Overview
■ Stock
Market
The stock market early in the week, started off with a steep surge, but finished
the week with a small gain. The index reached new yearly high levels (1,620
range) during trading hours, but the upward trend was limited. As foreign
investors increased program trades (sell orders), the market dropped to 1,610
range again. The market was affected by the US market’s 4 day straight drop.
■ ELS
Primary
Market
There was a decrease in ELS issuances. This week, public issues decreased to
51 new issues and private issues decreased to 78 issues, totaling 129 new
issues. Total issuance amount of public issues totaled 144.11 billion won, and
private issues totaled 260.35 billion won. [Figure 1] KOSPI200 & HSCEI Trend for the Past 1 Year
■ Weekly
Issuance
Type
Out of the 129 new issues, 69.7%, or 90 issues, were Step Down Hi-Five types,
and there were 31 option types, 8 miscellaneous types.