BPA Malaysia weekly bond market report 4 December 2016

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ta04708On November 30, 2016, the Organisation of the Petroleum Exporting Countries (OPEC) agreed to cut production by about 1.2 million barrels per pay for the first time in eight years to end the supply glut.

As a result, Brent crude oil prices spiked to levels above US$50 per barrel. Despite the significant strengthening of oil prices, the Ringgit closed the week at a slightly firmer rate of 4.4565 against the greenback from 4.4650 last week.

The soft performance of the Ringgit was due to the increased likelihood of an interest rate hike by the Federal Reserve in December on the back of better-than-expected third quarter GDP growth in the US and improvements in the labour market.

Nevertheless, the Thomson Reuters BPAM All Bond Index posted gains of 0.42 per cent to close at 147.61 from 146.995 point last week as MGS yields ended mostly lower.

The yields eased by 0.4 to 22 bps across all tenures except for 10-year and 1-year and below which saw yields inched higher by 0.5 to 7 bps.

 

Top 10 most active bonds:

The trade volume for the top 10 most actively traded bonds decreased to RM7.7 billion from RM8.5 billion recorded last week. The MGS maturing on November 29, 2019 emerged as the top traded bond with a total trade volume of RM1.1 billion.

 

Sovereign bond auction:

On November 29, 2016, the tender for the reopening of the 10-year benchmark MGS maturing on 30 November 2026 closed with a bid-to-cover ratio of 2.654 times. The highest, average and lowest yields came in at 4.485, 4.465 and 4.430 per cent respectively. The reopened amount is RM2 billion.

 

New Issuance(s):

On December 1, 2016, TSH Sukuk Ijarah Sdn Bhd issued a five-year sukuk with an issue amount of RM115 million at a profit rate of 5.05 per cent. The sukuk was rated AA-IS with a stable outlook by MARC.