US-China trade hopes lift stocks, oil hits three-month high

NEW YORK, Feb 23 ― Stocks rose in major markets across the world yesterday on bets of progress in trade talks between China and the United States, while crude futures hit their highest level in more than three months supported by ongoing supply…

Zimbabwe devalues currency to tackle economic crisis

HARARE, Feb 22 — Zimbabwe’s central bank began trading a sharply discounted replacement currency today, attempting to ease a cash crunch that has hobbled the economy and plunged millions deep into poverty. Zimbabwe adopted the dollar in 2009…

US, China sketch outlines of deal to end trade war, say sources

WASHINGTON, Feb 22 — The United States and China have started to outline commitments in principle on the stickiest issues in their trade dispute, marking the most significant progress yet toward ending a seven-month trade war, according to sources…

Chinese bank’s Panda bonds offer shows confidence in new govt

KUALA LUMPUR: The offer by a Chinese bank to issue Panda bonds in China for Malaysia is a positive sign that foreign countries and foreign investors are confident with the new government under the leadership of Prime Minister Tun Dr Mahathir Mohamad. Finance Minister Lim Guan Eng said the level of interest and confidence shown […]

Zimbabwe’s currency reality check puts plaster on deep wound

HARARE, Feb 21 — Zimbabwe’s decision to scrap a peg between its quasi-currency bond notes and the US dollar brings a welcome end to a failing monetary policy, but it is not the solution to a deeper crisis, economists said today. The Reserve Bank…

Top Glove prices US$200m maiden exchangeable bonds

PETALING JAYA: Top Glove Corp Bhd has priced its maiden exchangeable bonds in the principal amount of US$200 million (RM814 million) on Wednesday, via its subsidiary Top Glove Labuan Ltd.

The bonds have a tenure of five years and will mature on March 1, 2024. The bonds include an exchange option which enables bondholders to exchange their bonds for the company’s shares at an initial exchange price of RM6.20 per share.

The bonds, which were priced at an exchange premium of 20% with a coupon of 2% per annum, is the company’s inaugural offering in the international capital markets and marks the first exchangeable conventional bonds priced out of Malaysia, after almost a decade.

“Raising funds via the issuance of exchangeable bonds will enable us to refinance existing loans at a lower annual interest rate. This in turn, helps us to enhance our working capital and strengthen our financial position,” said executive chairman Tan Sri Dr Lim Wee Chai.

“Exchangeable bonds also enable investors to participate in the equity of our company upon exchange and allow them to benefit from an appreciation in the future share price,” he said in a statement today.

Top Glove said benefits of the bonds include lower funding costs due to the equity optionality embedded in the instrument; mitigation of exposure to fluctuating interest rates due to the fixed nature of the coupon under the bonds, resulting in a more efficient cashflow management; and diversification of funding sources.

The bonds also allow the group to naturally hedge its US dollar denominated funding instrument against the group’s revenue from its export business, which is mainly denominated in US dollar.

Govt in talks with China on Panda bonds: Guan Eng

KUALA LUMPUR: Finance Minister Lim Guan Eng today confirmed that Malaysia has received an offer for the issuance of Panda bonds from China and said the relevant parties are currently in discussions.

Speaking to reporters at the 12th Malaysian Property Summit, Lim said the offer from China Construction Bank has been communicated to the Prime Minister and the Cabinet.

“But we are still at the discussion stage. Unlike the Samurai bond for which the working paper has been presented to and approved by the Cabinet, and both countries have agreed on it. This one is still at the discussion stage,” he said.

Earlier this week, China’s ambassador to Malaysia, Bai Tian, said China Construction Bank is proposing to issue Panda bonds in China to Malaysia to help alleviate financial stress.

“I see this as a positive sign from other countries and foreign investors, who are confident about the administration of the new government led by Prime Minister Tun Dr Mahathir Mohamad. Because they are confident, they are willing to extend a loan, just like Japan with their Samurai bond. This is something that is being done for the first time since the 80s,” said Lim.

He said such offers from Japan and China reflect the interest of foreign investors in Malaysia and their confidence in the new government, which was not seen before.

He noted the Samurai bond’s coupon rate of 0.65% is below market rate compared with the coupon rate of a Goldman Sachs bond issuance under the previous government which was 100 basis points above the market rate.

The ¥200 billion (RM7.34 billion) 10-year Samurai bond, guaranteed by the Japanese government, will be issued next month, at a coupon rate not exceeding 0.65%. The Samurai bond was initiated by Mahathir, who requested his Japanese counterpart Shinzo Abe for yen-denominated credit in June last year.

The Samurai bond will be used to reduce debt accumulated by the previous government. The Samurai bond sale will be Malaysia’s first in three decades, having last raised such debt in 1989.

Meanwhile, Lim said the government hopes to conclude talks on the East Coast Rail Link (ECRL) but noted the challenge of ensuring that the cost is something that the country can afford while at the same time maintaining good relations with China.

“We still maintain the best of hopes that this matter can be resolved and that they can meet our request for the price reduction. Otherwise we would not be able to afford it,” he said.

Lim said the ECRL is one of the remaining projects to be concluded while most of the other projects that were being reviewed have been finalised.

As for the proposed Airport Real Estate Investment Trust (REIT), which was announced in Budget 2019, he said it is working towards appointing a REIT manager but it has not been finalised yet.

In his keynote address, Lim said the cost of living is still high although consumer price index (CPI) was at 1% in December, which is the lowest inflation rate in nine years.

He said the government is looking at how to ensure the low CPI can be filtered down and allow the public to benefit from the low inflation rate.

He said the CPI is sometimes used as a benchmark for wage increases, which is not so accurate thus the government is looking at another index that can better reflect the cost of living, so that wage rises reflect the actual situation.

Guan Eng: Govt in talks with China Construction Bank on Panda bond offer

KUALA LUMPUR: The Finance Ministry has received the offer for issuance of a Panda bond from China and the parties are currently in discussions.

Finance Minister Lim Guan Eng (pix) said discussions are ongoing and the offer from China Construction Bank is a positive sign from foreign investors.

Speaking to reporters at the 12th Malaysian Property Summit today, he said foreign investors’ willingness to extend loans to the government reflects their interest and confidence in the Malaysian government.

Earlier this week, China’s ambassador to Malaysia Bai Tian said that the China Construction Bank is proposing to issue Panda bonds in China to Malaysia to help alleviate financial stress.

M’sia set to attract more demand for sukuk

KUALA LUMPUR: Being the world’s biggest sukuk issuer, Malaysia is set to attract more demand for shariah-compliant bond worldwide via an initiative taken by the Qatar Financial Centre (QFC) to serve the US$2 trillion global Islamic finance market, said the Bond and Sukuk Information Exchange (BIX Malaysia). BIX manager Ahmad Al Izham Izadin said there […]

Foreign holdings of Malaysian bonds shrink for third month in a row

PETALING JAYA: Foreign holdings of Malaysian bonds declined RM2.3 billion in January, the third consecutive month of outflows, said RAM Ratings.

This was due to a sell-off for both short- and long-term government securities and corporate bonds.

“This has been a consistent trend through the last few months amid lingering global trade and geopolitical uncertainties,” the rating agency said in a statement today.

Nonetheless, it believes that the US Federal Reserve’s shift to a more dovish tone in its monetary policy statement released late January should support investor appetite for Malaysian and emerging market bonds in general.

“It has expressed that it will be more “patient” in future policy decisions, which contrasts against its earlier message of “further gradual increases”. In response to this, the benchmark 10-year MGS (Malaysian Government Securities) yield took a dive earlier this month, falling below the psychological level of 4% on Feb 13”.

On the domestic front, RAM said the private sector issuance was relatively robust in January with a gross issuance value of RM5.8 billion.

For the quasi-government segment, January remained quiet (issuance value of RM100 million), as observed in the last few years, further dampened by the bumped up issuance in Q4 2018.

“We expect this relatively muted trend to persist through the rest of this year, primarily due to the government’s project-rationalisation initiatives and the lengthening of project time lines, which should constrain new debt-raising initiatives,” noted RAM head of research Kristina Fong.

Meanwhile, the rating agency said appetite for government bonds was also very healthy in January, as indicated by the bid-to-cover (BTC) ratios.

“Both the 10-year GII and 7-year MGS achieved very strong BTC ratios of 4.13 and 3.91 times, respectively. The BTC ratio for the slightly larger 5-year GII came in at 1.97 times. Government issuance summed up to RM13 billion for the month (January 2018: RM10.5 billion).”