BPA Malaysia Weekly Bond Market Report 14 September 2014

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Over the week, the Ringgit Bond Market remained muted ahead of the next MPC and FOMC meeting which were scheduled to conclude next week. The TR BPAM All Bond Index pared back the losses from last week with a slight gain of 0.04 per cent to close at 136 as opposed to 135.95 the previous week.

On September 11, the Department of Statistics Malaysia reported that industrial production expanded at a much slower pace of 0.5 per cent year-on-year in July as compared to the seven per cent growth in June. The Manufacturing and Electricity index registered a slower growth of 3.1 and 4.9 per cent respectively while the Mining index recorded a decline of 7.8 per cent.

On the global front, China reported weaker-than-expected consumer inflation data on September 11 and trade surplus data which hit a record high due to sluggish imports on September 8. The economic data suggested weakness in domestic demand in the world’s second largest economy and fuelled speculations for more government stimulus measures to meet economic growth targets.

The turnover for the top 10 most actively traded bonds picked up slightly with the total traded amount increased from last week’s RM10.56 billion to RM11.32 billion this week, marking a rise of seven per cent. The newly issued Maybank 10 non-call five-year bond was the most heavily traded with RM2.2 billion done over the week.

On September 10, 2014, Malayan Banking Bhd (Maybank) issued a 10 non-call five-year bond worth RM3.5 billion with a coupon rate of 5.3 per cent.

Sabah Development Bank Bhd issued two RM100 million worth of Medium Term Notes (MTNs) maturing September 2015 with an interest rate of 4.32 per cent on September 11 and 12, 2014. The MTNs are rated AA1 with a stable outlook by RAM Ratings.

On September 12, 2014, Bank Pembangunan Malaysia Bhd (BPMB) issued four tranches of Murabahah MTNs maturing in 2021, 2024, 2029 and 2034 with a total issue size of RM3 billion.

On September 10, RAM Ratings has lifted the Negative Rating Watch on Syarikat Borcos Shipping Sdn Bhd’s (Borcos) unguaranteed RM160 million Sukuk Ijarah MTN Programme and downgraded the AA3 rating to A3/Stable. Concurrently, the rating agency has also lifted the Negative Rating watch and reaffirmed the enhanced ratings on issuer’s AAA-rated RM125 million Bank-Guaranteed Sukuk Ijarah MTN Programme and RM30 million Bank-Guaranteed Bai’Bithaman Ajil Islamic Debt Security following the extension of the unconditional and irrevocable bank guarantee by the issuer’s ultimate parent, BPMB, to cover one period’s profit payment on top of the original guarantee which covered only principal amount of the said issues.