The highlight of the week was the Federal Open Market Committee (FOMC) meeting, which was concluded on Wednesday. As widely expected, US policymakers held the target range for the federal funds rate unchanged at 0.75 to one per cent. According to the FOMC statement, US policymakers viewed that the slowdown in growth for the first quarter of this year was likely to be transitory.
Ringgit bond market continued to show bullish trend with the TR BPAM All Bond Index closed higher by 0.223 per cent to 152.263 compared to 151.924 last Friday.
The gain was mainly attributed to the flattening of 5-year to 20-year region of sovereign curves, which had shifted lower by approximately 1bp to 10bps.
The total trade volume for the top 10 most active bond dropped by 21.4 per cent this week due to holiday-shortened week. The five-year benchmark MGS paper maturing on March 10, 2022 gained the most interest with RM1.9 billion changed hands, followed by the five-year benchmark MGII paper maturing on April 14, 2022 with RM1.8 billion transacted.
On May 3, 2017, Bank Negara Malaysia announced the details for the first 30-year benchmark MGII maturing on 8 May 2047. The issue amount for tender is RM2 billion with another RM500 million to be privately placed. The tender closed on 5 May 2017 with a bid-to-cover ratio of 2.393 times. The highest, average and lowest came in at 4.913, 4.895 and 4.85 per cent respectively.
On May 3, 2017, YTL Power International Bhd issued a 10-year sukuk with an issuance size of RM2.5 billion. The sukuk has a profit rate of 5.05 per cent and is rated AA1 with stable outlook by RAM Ratings.
On May 5, 2017, there were three new issuances.
Cahya Mata Sarawak Bhd issued a five-year sukuk with an issuance size of RM500 million. The sukuk carries a profit rate of 4.80 per cent and is rated AA3 with stable outlook by RAM Ratings. DRB-Hicom Bhd issued a 3.5-year IMTN with a profit rate of 6.3 per cent. This RM100 million worth of IMTN is rated A+IS by MARC with stable outlook.
ORIX Leasing Malaysia Bhd issued a two-year bond with an issue amount of RM45 million. The bond is rated AA2 with stable outlook by RAM Ratings and carries a coupon rate of 4.30 per cent.
Rating action:
On May 5, 2017, RAM Ratings upgraded the long-term rating of Encorp Systembilt Sdn Bhd’s (ESSB) RM1.575 billion Sukuk Murabahah to AA1 from AA2 and the outlook on the rating was revised to stable from positive. The rating upgrade is premised on ESSB’s improved debt-servicing ability, which is supported by cash accumulation via consistent concession payments from the Government of
Malaysia, steady investment income and lower expenses. Hence, ESSB is able to achieve a minimum finance service coverage ratio of 1.50 times under RAM Ratings’ stressed scenario, which commensurates with an AA1 rating.