东南亚（印尼）-信贷-印尼与Quasis：缺乏推动力的情况下寻求价值-Asia Credit Indonesia vs.Quasis,searching for value amidst lack of catalysts-DeutscheBank

Deutsche Bank Markets Research Asia Indonesia Credit Energy Sovereigns Utilities Date 22 August 2017 Asia Credit Indonesia vs. Quasis: searching for value amidst lack of catalysts ________________________________________________________________________________________________________________ Deutsche Bank AG/Hong Kong DISCLOSURES AND ANALYST CERTIFICATIONS ARE LOCATED IN APPENDIX 1. MCI (P) 083/04/2017. Viacheslav Shilin, MBA Research Analyst (+65 ) 6423 5726 viacheslav.shilin@db.com Vikash Agarwalla, CFA Research Analyst (+65 ) 6423 5718 vikash.agarwalla@db.com Updated views on our bond recommendations In this note, we revisit our views on Indonesia and its two major quasi-sovereign entities – Pertamina and PLN. Indonesia’s quasi-sovereign complex continue to benefit from stabilising macro fundamentals as well as strong market technical given limited primary supply and we expect these conditions to last in the near term. That said, we do not see much spread upside for the quasis’ bonds as their valuations admittedly look stretched already either on a “spread to sovereign” or on a relative value basis compared to global and local peers (Fig 1 & 3). Indonesia sovereign bonds, in their turn, continue for the large part to outperform EM peers, especially such cross-over credits as Turkey and Russia (Fig 4). At the same time INDON bonds’ trading pattern tracks its higher-rated comps - e.g. Mexico - across the maturities (Fig 8) and lags only HY peers, such as Sri Lanka, which we consider overvalued (Fig 5). Interestingly, INDON 5Y cash bonds have outperformed INDON 5Y CDS, while both trade in-line in 10Y space (Fig 7). INDON bonds continue to attract quite strong investor appetite given somewhat slower supply in BBB sovereign space in global EM as of late, lack of diversification opportunities in Asia amidst trickling-in fund flows, and relatively stable domestic market indicators in Indonesia (especially IDR and inflation). At the same time, as we discuss later in this report, Indonesia lacks material positive idiosyncratic near-term catalysts and we do not expect positive rating actions or upgrades to rating outlooks to happen in the remainder of 2017. In terms of bond recommendations, PLN complex has underperformed that of Pertamina with spreads compressing between the two YTD (Fig 2). We expect Pertamina to trade flat to slightly tighter than PLN given its superior standalone credit profile and relatively stronger technicals (especially after the recent upgrade to IG by S&P). Thus, we maintain our preference for Pertamina over PLN. Specifically we have Buy on Pertamina’s long end (2041s and 2042s) and Sell on PLN 2047s. We also think that front-end of Pertamina’s bond complex looks expensive trading just ~20bps over comparable sovereign bonds. Maintain our Sell on Pertamina 2022s. INDON 2043s stand out as the weakest link on the entire sovereign curve YTD spread-wise, and we close our Sell recommendation on this note (upgrade them to H