BPA Malaysia weekly bond market report 24 May 2015

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The Thomson Reuters BPAM All Bond Index registered a slight gain of 0.09 per cent to end the week at 141.2 from 141.08 in the previous week. Over the week, the MGS curve was generally down by 1 to 5bps amid muted market activity.

On May 20, 2015, the US Federal Reserve (Fed) released its April Federal Open Market Committee (FOMC) minutes which indicated a lower possibility of raising short-term interest rates in June.

According to the minutes, the committee judged that weak economic data released in the first quarter of the year has added to the uncertainty regarding economic outlook and many officials thought there would be insufficient data to warrant a rate hike in June meeting.

On May 22, 2015, Department of Statistics Malaysia released the Consumer Price Index (CPI)  for the month of April 2015. The CPI registered a growth of 1.8 per cent in April 2015 largely due to the rise in the index for alcoholic beverages & tobacco group (13 per cent), health (five per cent), restaurants & hotels (4.3 per cent) and food & non-alcoholic beverages (3.1 per cent).

 

 Top 10 most active bonds:

Trading volume of the top 10 most active bonds in the ringgit bond market was dominated by sovereign issues. However, total trading volume for the week saw a significant drop from previous week’s RM12.51 billion to RM6.89 billion.

The off-the-run MGS maturing July 2016 was the most actively traded with a total trade volume of RM1.87 billion.

 

Sovereign bond auction:

On May 19, 2015, Bank Negara Malaysia announced the tender details for the RM2 billion new 20-year benchmark MGS maturing on May 31, 2035.

The tender closed  on May 21, 2015 with a strong bid-to-cover ratio of 2.724 times. The highest, average and lowest yields are 4.267, 4.254, and 4.237 per cent respectively. The bond was issued on May 22, 2015.

 

New bond(s):

On May 18, 2015, Mydin Mohamed Holdings Bhd issued a three-year sukuk carrying a profit rate of 4.2 per cent with an issue size of RM55 million.

The sukuk was assigned AAA(FG) rating with a stable outlook by RAM Ratings on the back of an irrevocable and unconditional financial guarantee extended by Danajamin Nasional Bhd.

On May 21, 2015, TF Varlik Kiralama AS issued a five-year sukuk amounted to RM210 million with a profit rate of 5.75 per cent.

The sukuk was rated AA3 by RAM Ratings with a stable outlook.