Over the week, the movements of MGS and GII yields were mixed ranging from a decline of one basis point (bp) to an increase of two bps from the two-year to 30-year tenures as compared to last Friday’s levels due to lack of headline news or economic data impetus.
Despite the minimal movement in the govvies market, Quasi Government segment displayed a bullish trend during the week as the Quasi Government curves decreased by up to 18bps across the tenures.
This was due to the RM2.5 billion Danainfra Nasional Bhd’s (Danainfra) new sukuk issuances during the week, whereby the yields of the new issuances were about three to 20bps lower than the existing similar tenure Danainfra sukuk.
In addition, strong demand seen for liquid AAA-rated bonds such as Aman Sukuk Bhd, Manjung Island Energy Bhd, Malaysia Airports Capital Bhd, Telekom Malaysia Bhd and Projek Lebuhraya Usahasama Bhd resulted in lower corporate bond yields.
As such, the TR BPAM All Bond Index recorded a gain of 0.21 per cent to close at 135.40, compared to 135.12 in the previous week.
Top 10 most active bonds:
The total trading volume for the top 10 most active bonds was similar to last week’s trading volume, with a total of RM11.98 billion changed hands.
Benchmark GII papers were actively traded this week with three of the six benchmark GII papers appearing in the top 10 most active bonds list.
The 10-year benchmark GII paper topped the list and recorded a trading volume of RM2.15 billion.
Sovereign bond auction:
The re-opening tender for RM1.5 billion 15-year benchmark GII paper maturing on 06 December 2028 closed on 21 July 2014 with a strong bid-to-cover (BC) ratio of 3.813 times, the highest BC ratio to date. The lowest, average and highest yields are 4.385, 4.393 and 4.399 per cent respectively.
New bond(s):
On July 21, 2014, Sabah Development Bank Bhd issued a one-year bond with an issuance amount of RM50 million. The bond carries a coupon rate of 4.35 per cent and is rated AA1 by RAM Ratings.
On July 24, 2014, Danainfra issued six tranches of sukuk, which amounted to RM2.5 billion, with tenures ranging from seven years to 30 years.
These sukuk carry profit rates ranging from 4.23 per cent to 5.29 per cent and is rating exempted as the sukuk are guaranteed by the Government of Malaysia. In addition to the new issuances in April 2014, Danainfra has raised RM5.1 billion year-to-date.
The proceeds raised will be used to finance the Mass Rapit Transit project. On the same date, Sabah Credit Corporation issued a RM50 million seven-year sukuk with a profit rate of 5.10 per cent. The sukuk is rated AA1 by RAM Ratings.