BPA Malaysia weekly bond market report 14 February 2016

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TA02406The TR BPAM All Bond Index recorded a minimal gain of 0.1 per cent, closed at 145.07, compared to last Friday’s level at 144.93. Over the week, no obvious trend was observed in the sovereign segment due to lack of fresh drivers. For MGS segment, a mixed trend was observed in the short to belly of the curve while 15-year and above ended higher by 2bps to 4bps. For GII segment, yields in the short to belly of the curve decreased up to 3bps while the 15-year and above observing an increase in yield up to 3bps.

 

Top 10 most active bonds:

The total trade volume for the top 10 most actively traded bonds dropped by approximately 49 per cent to RM6.57 billion due to holiday-shortened week as most of the market players were away for the Chinese New Year holidays. The 10-year benchmark MGS topped the list with about RM2 billion changed hands.

 

Sovereign bond action:

On February 12, 2016, Bank Negara Malaysia announced the tender details for the new 7.5-year benchmark MGS maturing on 17 August 2023. The issuance size for this new issue is RM4 billion and the tender will be closed on February 16, 2016.

 

Rating Actions:

On February 5, 2015, RAM Ratings downgraded the ratings of Mudajaya Corporation Bhd’s Islamic Medium-Term Notes Programme (2014/2029) and Islamic Commercial Papers Programme (2014/2021) to A2/Stable/P2 from AA3/Negative/P1. The ratings reflect the credit profile of Mudajaya Corp’s parent, Mudajaya Group Bhd.

On February 12, 2015, MARC reaffirmed the ratings of MARC-1ID/AAAID on the RM4.5 billion Islamic Medium Term Note Programme and RM500 million Islamic Commercial Paper/Islamic Medium Term Note Programme with a combined limit of RM4.5 billion. At the same time, MARC revised the outlook of ICP/IMTN to negative from stable.

The negative outlook revision factors in the slower-than-expected pace of measures initiated thus far to address the substantial increase in group borrowings following the debt-funded acquisition of New Britain Palm Oil Ltd for RM6 billion in March 2015. Some of the group’s earlier plans to pare down its debt have been postponed owing to weak market conditions.