BPA Malaysia weekly bond market report 5 February 2017

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ta05177Trading activities in the Ringgit Bond market was muted during the holiday-shortened week. The MGS curve flattened as yields at the belly increased up to 7bps while yields at the long end of the MGS curve shed up to 9bps.

The flattening of the curve had resulted in a meagre gain of 0.061 per cent for the Thomson Reuters BPAM All Bond Index to close at 150.291 points this week.

 

Top 10 most active bonds:

The total trade volume of the top 10 most actively traded bonds halved to RM4.8 billion from RM9.6 billion last week due to holiday-shortened week as most of the market players are away for the Chinese New Year holidays.

Several MGS benchmark bonds were actively traded during the week with 7-year MGS benchmark topping the list with RM646 million trades done followed by the 10-year and 5-year MGS benchmark bonds with RM603 million and RM573 million trades done respectively.

 

New issuance(s):

On February 2, 2017, Sports Toto issued a 1.4-year Medium Term Notes (MTN) with an issue amount of RM30 million at a coupon rate of 4.47 per cent. The MTN is rated AA- with a stable outlook by MARC.

 

Rating Action(s):

On February 2, 2017, MARC removed the ratings on WCT Holdings Berhad’s (WCT Holdings) RM1 billion MTN Programme and RM1.5 billion Sukuk Murabahah Programme from MARCWatch Developing and concurrently affirm the ratings at AA- and AA-IS respectively with a negative outlook.

The ratings were removed from MARCWatch Developing after the rating agency had reviewed WCT Holdings’ business plan and the impact on its credit metrics based on recent corporate development, which is a major change in shareholders after the groups founding members disposed their stakes.

MARC notes that WCT Holdings has largely retained its earlier plan to deleverage which entails share placement and asset monetisation, proceeds from which would be utilised to pare down its relatively high borrowings which remain a source of rating pressure.

MARC further notes that as of to-date, WCT Holdings has announced a private placement of new shares of up to 10% of its total paid-up capital to raise about RM212.5 million while the RM347.0 million sale of its office tower, Ascent Paradigm, is in the documentation stage.

Notwithstanding these initiatives, MARC has maintained a negative outlook on the ratings, taking into account market and execution risks.

Moreover, other components of these plans including the proposed sale of its malls are still in the early stages.