On Tuesday, the US Federal Reserve (US Fed) chair Janet Yellen surprised the market by her hawkish rhetoric on monetary policy that the US Fed should be “wary of moving too gradually” and it would be “imprudent” to leave rates on hold until inflation reaches the target of two per cent. This bolstered the expectations of one more rate hike in year 2017.
Coupled with US President’s Trump tax reform plan announced on Wednesday, greenback rallied and resulted in the exchange rate of Ringgit versus greenback weakened to 4.222 on Friday compared to 4.1975 last Thursday. As a result, the long end of the sovereign curves steepened by 1bp to 10bps and hence, the TR BPAM All Bond Index registered loss of 0.063 per cent to close at 154.805.
Top 10 most active bonds:
The trade volume of the top 10 most active bonds increased by approximately 90 per cent this week compared to last week. The five-year benchmark MGS maturing on March 10, 2022 topped the list with RM2.1 billion changed hands.
Sovereign Auction(s):
The tender for the re-opening of the RM3 billion 15-year benchmark MGII maturing on August 30, 2033 closed with a muted bid-to-cover ratio of 1.727 times. The highest, average and lowest yield came in at 4.64, 4.579 and 4.52 per cent respectively. Meanwhile, there was additional RM1 billion of the re-opening was privately placed.
New Issuance(s):
On September 27, 2017, RHB Bank Bhd issued a RM750 million of 10-year Basel III Tier-2 subordinated bond with a non-call period of five years. The bond carries a coupon rate of 4.82 per cent and is rated AA3 with stable outlook by RAM Ratings.
On September 28, 2017, GovCo Holdings Bhd issued four tranches of sukuk amounted to RM1.2 billion with tenures of five years to 15 years.
The profit rates of these sukuk range from 4.04 to 4.88 per cent.
Credit rating is exempted for the sukuk as the sukuk are guaranteed by Government of Malaysia.