Malaysia bond market weekly update 20 August 2017

In the Ringgit market, solid buying interest was seen across the MGS yield curve with yields eased between one bp to 12bps from three-year curve point onwards.

As a result, the Thomson Reuters BPAM All Bond Index posted gains of 0.169 per cent to close at 154.050 points from 153.790 points last week.

On August 17, 2017, Fitch Ratings affirmed ’s A- rating with a stable outlook on the premise of strong gross domestic product (GDP) growth, sustained current account surplus and the country’s net external creditor position.

Nonetheless, the rating remains constrained by some structural metrics (which is per capita GDP and governance indicators) that are weaker than the ‘A’ median and government debt that is higher than peers and could be affected by sizeable contingent liabilities.

On August 18, 2017, Bank Negara Malaysia reported that Malaysia’s economy expanded at a faster pace compared to a year ago.

Malaysia’s GDP recorded a 5.8 per cent growth rate in the second quarter of 2017 as compared to four per cent growth registered in the same quarter last year.

All sectors on the production side posted favorable growth.

Services, Manufacturing and Agriculture were the major drivers of the economy.

On the expenditure side, Private Final Consumption Expenditure were the main catalyst for the growth.

Trading volume picked up as the total trade volume of the top 10 most active bonds increased by approximately 25 per cent to RM7.8 billion from RM6.2 billion last week.

Both MGS and MGII three-year benchmark papers maturing on February 15, 2021 and April 15, 2020 respectively were heavily traded and accounts for 35.9 per cent of the total trade volume for the top 10 most active bonds.

On August 14, 2017, the tender for the RM3.5 billion new 3.5-year benchmark MGS maturing on February 15, 2021 closed with bid-to-cover ratio of 1.706 times.

The highest, average and lowest yield came in at 3.455 per cent, 3.441 per cent and 3.422 per cent respectively.

On August 17, 2017, Malayan Bhd issued a one-year discount Medium Term Notes (MTN) worth RM200 million.

The bond is rated AAA with stable outlook by RAM Ratings.

On the same day, Perbadanan Tabung Pendidikan Tinggi Nasional issued two tranches of IMTN which amounted to RM1.8 billion. The six-year and 15-year tranches carry profit rates of 4.29 per cent and 4.93 per cent respectively. The IMTNs are guaranteed by the Government of Malaysia.

On August 15, 2017, revised the outlook on Kapar Energy Ventures Sdn Bhd’s (KEV) RM2 billion Ijarah to stable from negative while reaffirming its AA+IS rating.

The outlook revision is premised on KEV’s improved cash flows and stronger liquidity position.

The revision also considers the support recently extended by Tenaga Nasional Bhd through the implementation of periodic resetting of Kapar Power Station outage rates that has translated to an improvement in operational performance.

On August 17, 2017, MARC revised the outlook on Hong Leong Financial Group Bhd’s (HLFG) RM1.8 billion Commercial Papers and Medium-Term Notes (CP/MTN) to positive from stable while affirming its MARC-1/AA rating.

The outlook revision for HLFG is in tandem with MARC’s revision of HLB’s outlook to positive from stable to reflect HLB’s steady financial performance that is underpinned by prudent risk management and conservative lending practices.

Source: Borneo Post Online

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