Following the rate hike by the central bank in the previous week, which was deemed timely by investors considering the current domestic inflationary environment and to ensure the sustainability of Malaysia’s economic growth, market sentiment in the Ringgit bond market slowly picked up and Malaysian Government Securities (MGS) yields were seen falling up to five basis points (bps) between Monday and Thursday.
Then, during late evening on July 17, news of a Malaysian Airline System Bhd (MAS) passenger jet crashing in eastern Ukraine, possibly shot down by a surface-to-air missile triggered a shift in investments to safe haven assets such as the US Treasuries and for the domestic financial market, the ringgit bonds. Following the incident, US Treasuries yields fell between one to eight bps while on Friday, MGS yields followed suit and fell between one and three bps across all tenures.
As a result, the TR BPAM All Bond Index closed 0.29 per cent higher at 135.12 from the previous week’s closing of 134.73.
The total trading volume for the top ten most actively traded bonds came in slightly lower than the previous week at RM11.7 billion.
On July 17, 2014, the Government of Malaysia announced the re-opening tender for RM1.5 billion 15-year benchmark GII paper maturing on December 6, 2028.
On July 14, 2014, Notable Vision Sdn Berhad (NVSB) issued a Class A Senior Medium Term Note (MTN), a Class B Junior MTN and a Class C Junior MTN, all with a tenure of five years. The Class A and Class B MTNs have an issuance size of RM95 million each and the Class C Junior MTN has an issuance size of RM266.5 million.
On July 18, 2014, Pac Lease Bhd issued a RM60 million 1.5-year MTN. The MTN is rated AA3 by RAM Ratings and offer a coupon rate of 4.3 per cent. Pac Lease Bhd is fully owned by Oversea-Chinese Banking Corporation Ltd since a complete takeover exercise carried out in May 2012.
Aquasar Capital Sdn Bhd (Aquasar) made its debut in the ringgit bond market with the issuance of 15 tranches of Islamic MTNs (IMTNs) with a total issuance size of RM1.5 billion. The IMTNs were assigned an enhanced rating of AAA(s) by RAM Ratings by virtue of the State Government of Sarawak’s (SGS) credit strength as the sukuk payments each year come ultimately from the SGS.
On July 17, 2014, RAM Ratings had revised the outlook of Tenaga Rapi Sdn Bhd’s (Tenaga Rapi) RM60 million Nominal Value Secured Bonds (Bonds) from stable to positive. The source of repayment for the Bonds comes from the residual cash after servicing Anjung Bahasa Sdn Bhd’s (Anjung Bahasa) outstanding RM110 million Junior Notes (Notes).
As the Anjung Bahasa Notes will mature on June 18, 2015, RAM Ratings had revised the outlook on the expectation that the Bonds would no longer be subordinated in terms of priority to Anjung’s cashflow and assets placed as security, upon redemption of Anjung’s Notes in June 2015.