BPA Malaysia weekly bond market report 15 October 2017

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Trading flows were thin in the domestic market at the start of the week due to the absence of fresh drivers.

Highlight of the week was the re-opening of the 20-year benchmark MGII that was re-opened on Friday.

Other than that, market focus was on the release of FOMC minutes in the US and the Index of Industrial Production (IPI) by Department of Statistics Malaysia.

The FOMC minutes released on Thursday did not deliver surprises, albeit overall sounded dovish, as the concerns on softer inflationary pressure and slower pace of rate hike were already expected by the market.

On the other hand, the Malaysian IPI for the month of August 2017 grew by 6.8 per cent compared to the same month last year, supported by growth in Manufacturing (7.6 per cent), Mining (5.3 per cent) and Electricity (three per cent) sectors.

The MGS yield curve movements from the previous week were mixed, with the short-end of the curve and seven to 10-year region easing one to two bps while the long-end of the curve climbing up two bps.

As a result, the TR BPAM All Bond Index was relatively unchanged at 154.952 points compared to 154.900 points last week.

 

Top 10 most active bonds:

Trading activities in the Ringgit bond market remained subdued during the week.

The trade volume of the top 10 most active bonds amounted to RM5.9 billion, a tad higher than RM5.5 billion done last week.

The seven-year benchmark MGS maturing on September 30, 2024 topped the list with RM1.5 billion changed hands.

 

Sovereign auction(s):

On October 10, 2017, BNM announced the tender details for the re-opening of the RM1.5 billion 20-year benchmark MGII maturing on August 4, 2037.

Another RM1.0 billion will be privately placed.

The tender was closed on October 12, 2017 with a bid-to-cover ratio of 2.147 times.

The highest, average and lowest yield came in at 4.803 per cent, 4.785 per cent and 4.755 per cent respectively.

 

New issuance(s):

On October 11, 2017, RHB Investment Bank Bhd issued a 10-non-call-five-year Basel III-compliant Subordinated Note worth RM200 million.

The Subordinated Note carries a coupon rate of 4.9 per cent and is rated AA3 by RAM Ratings with a stable outlook.