The Thomson Reuters BPA Malaysia All Bond Index extended its gain from the previous week albeit growing at a slower rate at 0.10 per cent to close at 123.93 this week.
Sovereign papers traded range bound as market players remained on the sidelines, awaiting the release of the 3Q2011 gross domestic product (GDP) announcement on Nov 18, 2011 where the GDPgrowth accelerated in the third-quarter to 5.8 per cent, beating market expectations.
However, the central bank said in a statement on Friday that the more challenging international environment could present greater downside risks to Malaysia’s growth prospects.
Looking at the Top 10 most active bonds, the seven-year benchmark GII, which reopened for tender this week, topped the table with a turnover of RM2.7 billion.
As usual, the other top 10 most active bonds were still dominated by sovereign papers.
On Nov 18, 2011, RAM Rating Services Bhd had downgraded the long-term rating of Texchem Resources Bhd’s (Texchem) RM100 million Commercial Papers/Medium-Term Notes Programme (CP/MTN), from A3 to BBB1, with negative outlook.
The downgrade reflected Texchem’s weakened business and financial performance while the negative outlook reflected concerns of external events such as the current devastating floods in Thailand, the slowdown of the global semiconductor industry, and the mounting economic woes of the US and European nations which would impact Texchem’s overall performance.
MARC had affirmed Kuwait Finance House (Malaysia) Bhd’s (KFHMB) long-term and short-term financial institution ratings of AA+/MARC-1, following the rating agency’s affirmation of the long-term and short-term financial institution ratings of its parent, Kuwait Finance House K.S.C. (KFH) at AAA/MARC-1.
The outlook on the ratings of both institutions had been revised to stable from negative.
KFH’s asset quality and its profitability have been affected by the downturn in Kuwait and other GCC economies, but the bank is showing signs of stabilising asset quality due to the improving economic environment in its key markets.
The re-opening of the seven-year benchmark GII maturing in August 2018 with an issue amount of RM3 billion had garnered a decent bid-to-cover ratio of 2.6 times (2.42 times in February 2011).
The tender closed on Nov 14, 2011 with an average yield of 3.677 per cent.