Profit taking activities were seen in the Ringgit Bond Market this week after strong rally last week as a result of surprise rate cut announced by Bank Negara Malaysia.
Coupled with ringgit depreciation to 4.0560 from 3.9475 last Friday, which was partly due to 1MDB negative news, the TR BPAM All Bond Index recorded losses of 0.09 per cent, closed at 150.07 compared to 150.21 last Friday.
On Wednesday, Department of Statistics Malaysia released Consumer Price Index (CPI) in June 2016, which rose 1.6 per cent year-on-year compared to two per cent increase in the previous month.
This figure also lower than market consensus of 1.8 per cent.
The slower pace of increase for CPI in June 2016 was mainly influenced by lower transportation cost, which the price for this category decreased by 8.5 per cent.
On the other hand, the increase in the index is mainly contributed by index for Alcoholic Beverages & Tobacco (21.9 per cent), Food & Non-Alcoholic Beverages (4.2 per cent), Housing, Water, Electricity, Gas & Other Fuels (2.4 per cent), Miscellaneous Goods & Services (2.3 per cent), Restaurants & Hotels (2.2 per cent) and Education (2.1 per cent).
The trading activities in Ringgit Bond Market normalised this week with RM11.6 billion transacted for the top 10 most active bond compared to RM38.6 billion last week.
The five-year, seven-year and 10-year benchmark GII were the top three most active bonds with a total trade volume of RM4.9 billion changed hands.
On July 19, 2016, Bank Negara Malaysia announced the tender details for the reopening of five-year benchmark GII maturing on 26 August 2021 with an issuance size of RM3.5 billion.
The tender closed on 21 July 2016 with a strong bid-to-cover ratio of 2.454 times.
The highest, average and lowest yields came in at 3.410 per cent, 3.401 per cent and 3.390 per cent respectively.
On July 18, 2016, Sabah Development Bank Bhd issued a three-year bond with a coupon rate of 5.10 per cent. The RM100 million worth of bond is rated AA1 by RAM Ratings with stable outlook.
On July 20, 2016, Malayan Banking Berhad issued a one-year zero coupon senior bond with an issuance size of RM200 million.
The bond is rated AAA with stable outlook by MARC.
On July 19, 2016, RAM Ratings downgraded the long-term ratings of UMW Holdings Bhd’s Islamic Debt Programmes from AAA to AA2 and revised the rating outlook to stable from negative.
Concurrently, its short-term issue rating of P1 has been reaffirmed.
The downgrades were mainly due to a weakened operating performance and financial profile, which are not expected to recove r significantly at least over these two years.
Substantially lower earnings as a result of continued challenging operating conditions together with expected higher debt requirements had led to a weaker financial profile.
The revised outlook on the long-term ratings was reflective of the gradual improvement in the Group’s operating and financial performance that RAM Ratings envisage from FY Dec 2017.