BPA MALAYSIA WEEKLY BOND MARKET REPORT 28 Aug 2011

Looking at the top 10 most active bonds, sovereign pa­pers such as the MGS and GII as well as BNM notes continued to rule the top 10 most actively traded bonds during the week.

With regards to the All Bond Index Performance, weekly gain was 0.02 per cent from 122.57 to 122.59 points. Government se­curities curve steepened from the belly onwards as market players took profit ahead of extended Hari Raya holidays next week.

The US Treasury yield curve demonstrated the same bearish steepening phenomenon.

The largest issuance seen for the week is by YTL Power International Bhd, which was rated AA1 by Rating Agency Malaysia.

It issued RM2.2 billion worth of seven year bonds at a coupon rate of 4.35 per cent per annum.

The rating actions of the week included the long-term rating of Kuala Lumpur Kepong Bhd’s existing RM500 million Su­kuk Ijarah Commercial Pa­per/Medium-Term Notes Programme (2007/2012) be­ing upgraded from AA2 to AA1 on August 22 while the rating outlook was revised from positive to stable.

Meanwhile, the short-term rating of the debt facil­ity was reaffirmed at P1.

The upgrade for the long-term rating was premised on KLK’s solid operating and financial track records over the past five years.

On the same day MARC placed its AAID long-term rating on MTD InfraP­erdana Bhd’s RM700.0 million Islamic Medium Term Notes (IMTN) Pro­gramme on MARCWatch Developing.

MARC also placed its rat­ing of AAIS on Alloy Prop­erties Sdn Bhd’s (formerly known as Haluan Gigih Sdn Bhd) Sukuk Musyar­akah Medium Term Note (IMTN) Programme of up to RM240 million on MARC­Watch Negative.

On August 26, RAM Ratings placed the P1 rating of Esso Malaysia Bhd’s RM300 million Is­lamic Commercial Pa­pers Issuance Programme (2011/2018) (Sukuk Pro­gramme) on Rating Watch, with a negative outlook.

The Rating Watch was premised on RAM Rating’s concerns that Esso’s credit profile would deteriorate after the exit of its control­ling shareholder, Exxon Mobil Corporation, fol­lowing Philippines-based San Miguel Corporation’s proposed acquisition of ExxonMobil’s entire 65 per cent-stake in Esso.