The Malaysian bond market registered its first weekly drop for 2018 despite a firmer ringgit.
The TR BPAM All Bond Index shed 0.115 per cent, ending the week at 156.377 points compared to 156.557 points last Friday, on the back of rising yield seen in the MGS.
With the exception of the 30-year curve point which eased by 3bps, the whole MGS yield curve shifted up by up to 11bps over the week as investors positioned themselves ahead of the Monetary Policy Committee (MPC) meeting.
In addition, bearish sentiment over in the UST yield curve stemming from a higher inflation outlook in the world’s largest economy had also contributed to the rise in MGS yield domestically.
The total trade volume of the top 10 most actively traded bonds declined by 33 per cent from RM11 billion last week to RM7.3 billion this week as investors side-lined ahead of MPC meeting.
The benchmark MGII paper maturing on April 14, 2022 and July 26, 2027 topped the list with a combined traded amount of RM3.3 billion.
On January 19, 2018, Cagamas Bhd issued three tranches of Medium Term Notes (MTN) with a combined issuance amount of MYR450 million.
The MTNs, which are maturing in 2019, 2020 and 2021 carry coupon rates of 3.73, 3.95 and 4.08 per cent respectively and are rated AAA with stable outlook by both MARC and RAM Ratings.
On January 17, 2018, RAM Ratings puts MRCB Southern Link’s Senior Sukuk on negative Rating Watch, following the abolishment of toll collection at the 8.62km Eastern Dispersal Link (EDL) effective January 1, 2018 and the takeover of the EDL by the Government of Malaysia.
As at December 31, 2017, MRCB Southern Link’s cash balances stood at RM17.45 million, which is insufficient to settle the ensuing principal and profit payments on its Senior Sukuk in view of the absence of toll revenue from January 1, 2018.
The rating watch is expected to be resolved as soon as the negotiations on termination of EDL’s Concession Agreement between the EDL toll concessionaire and the Government of Malaysia is concluded and the details on the final settlement amount are announced.