BPA Malaysia weekly bond market report 14 January 2018

On Tuesday, Bank of Japan (BoJ) announced to trim its purchases of Japanese government bonds (JGB) with remaining tenures of 10 years to 25 years as well as those with remaining tenures of 25 years to 40 years.

This action has triggered speculation that BoJ may consider to raise its yield targets this year. Following this, the yields of long-dated JGB bonds surged to one-month highs. The US Treasuries were also pressured by BoJ’s tapering move with the long end of US Treasuries yield curve steepened by six to seven bps on Tuesday.

BoJ’s action has also triggered the sell-off in the local sovereign bond market as seen in the first half of the week.

However, bargain hunting activities emerged towards the end of the week and resulted in the flattening of the belly and long end of sovereign yield curves. Hence, the TR BPAM All Bond Index registered a gain 0.077 per cent and closed the week at 156.557 points compared to 156.436 points last Friday.


Top 10 most active bonds:

The trading activities of the top 10 most active bonds increased by 32.4 per cent this week to RM11 billion. The top three of the list were five-year benchmark MGII, 10-year benchmark MGII and 10-year benchmark MGS papers, which have recorded a total trade volume of RM6.3 billion.


Sovereign auction(s):

On January 10, 2018, Bank Negara Malaysia announced the tender details for the re-opening of the RM4 billion five-year benchmark MGII maturing on April 14, 2022.

The tender closed on January 12, 2018 with a bid-to-cover ratio of 2.581 times. The highest, average and lowest yield came in at 3.829, 3.823 and 3.81 per cent respectively.


New issuance(s):

On January 8, 2018, Segi Astana Sdn Bhd issued 10 tranches of bonds with tenures of one-year to 10-year. These bonds have a total issuance size of RM415 million with coupon rates ranging from 4.8 per cent to 5.7 per cent. MARC assigned rating of AA- with stable outlook for these issuances.

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