Market started the week on the sidelines while they await the outcome of the Federal Open Market Committee (FOMC) meeting, with the US Treasuries yields climbing in anticipation of the first rate hike by the US monetary policymaker in 2018.
The MGS yield curve bear-steepened as the long end of the yield curve inched up by 1 to 5bps on Wednesday compared to last Friday.
As expected, FOMC raised the federal funds rate target range by 25bps from 1.50 per cent to 1.75 per cent on Thursday.
However, the central bank’s projection of three rate hikes this year instead of four was less hawkish than expected.
Therefore, yields reversed post-FOMC, partially also owing to the trade war tension between US and China that triggered a risk-off mode. As a result, MGS ended the week little changed.
The Thomson Reuters BPAM All Bond Index added 0.079 per cent to close at 157.609 from 157.484 points a week ago.
On March 21, 2018, the Department of Statistics Malaysia reported that the Consumer Price Index increased by 1.4 per cent in February 2018 as compared to the same month last year.
The increase in the index was mainly due to higher prices in food & non-alcoholic beverages (three per cent), furnishings, household equipment & routine household maintenance (2.1 per cent), and health (2.1 per cent).
On March 22, 2018, Bank Negara Malaysia (BNM) reported that Malaysia’s international reserves stood at US$103.9 billion as at March 15, 2018, and the reserves position is said to be sufficient to finance 7.3 months of retained imports and is 1.1 times the short-term external debt.
The total trade volume for the top 10 bonds dropped to RM5.9 billion compared to RM9.2 billion last week.
The 15-year benchmark MGII paper maturing on 15 June 2033 topped the list with RM1 billion changed hands.
On March 20, 2018, BNM announced the details for the reopening of the 15-year benchmark MGII maturing on June 15, 2033. The reopening amount for the tender is RM2.5 billion with another RM1 billion to be privately placed.
The tender closed on 22 March 2018 with a bid-to-cover ratio of 1.996 times.
The highest, average and lowest yield came in at 4.564, 4.55 and 4.540 per cent respectively.
On March 21, 2018, Danga Capital Bhd issued a 15.5-year Islamic Medium Tenure Note (IMTN) with an issuance size of RM2 billion.
The IMTN carries profit rate of 5.02 per cent and is rated AAA(S) with stable outlook by RAM Ratings.
On March 23, 2018, Cagamas Bhd issued a three-year IMTN with a profit rate of 4.17 per cent. The RM525 million IMTN is rated AAA with stable outlook by MARC and RAM Ratings.
On March 21, 2018, RAM Ratings placed the AA2 rating of UMW Holdings Bhd’s (UMW) RM2 billion Islamic MTN Programme (2013/2028) on Rating Watch with a positive outlook, premised on the issuer’s proposed acquisitions of Perusahaan Otomobil Kedua Sdn Bhd (Perodua) and MBM Resources Bhd.
The acquisitions are expected to strengthen UMW’s business and financial profiles as it will become Malaysia’s largest automotive group after successfully acquiring a controlling interest in Perodua.