BPA Malaysia Weekly Bond Market Report

The Thomson Reuters BPAM All Bond Index pared previous week’s losses to close at 160.346 points from 160.075 points last Friday.

Buying interest was seen in the government papers as concerns over emerging market subsided, coupled with fresh trade talks between US and China.

As a result, MGS yields shed between two bps and six bps from the five-year to 25-year region.

During the week, both Bank of England (BoE) and the European Central Bank (ECB) left its interest rates unchanged.

Key takeaways from the ECB’s monetary policy are the confirmation of plans to wind down its bond purchases at the end of December 2018 and the current interest rate levels are expected to be maintained at least through the summer of 2019.

Top 10 most active bonds:

In the holiday-shortened week, the total traded amount for the top 10 most active bonds decreased to RM6 billion from RM10.4 billion last week.

Shorter tenured papers were in demand with off-the-run MGS and GII benchmark maturing on March 15, 2019 and April 30, 2019 respectively topped the list with cumulative traded amount of RM2.8 billion.

Sovereign auction(s):

On September 7, 2018, BNM announced the tender details for the reopening of the 30-year benchmark GII maturing on May 8, 2047 with an issuance size of RM2 billion.

The tender closed on September 13, 2018 with a bid-to-cover ratio of 1.935 times.

The highest, average and lowest yields came in at 4.992, 4.973 and 4.932 per cent respectively.

New issuance(s):

On September 13, 2018, CIMB Bank Bhd and CIMB Group Holdings Bhd each issued a 11-year non-call six-year subordinated debt with a coupon rate of 4.88 per cent with an issuance size of RM1.2 billion each.

The CIMB Group Holdings Bhd subordinated debt is rated AA with stable outlook by MARC while the CIMB Bank Bhd subordinated debt is rated AA+/stable by MARC and AA2/stable by RAM Ratings.

UMW Holdings Bhd issued a five-year Islamic Medium Term Notes (IMTNs) with an issuance size of RM200 million.

The IMTN carries a profit rate of 4.65 per cent and is rated AA2 with a Rating Watch positive outlook by RAM Ratings.

On September 14, 2018, Malaysia Debt Ventures Bhd issued a RM230 million worth of IMTNs that bear profit rate of 4.39 per cent.

The 10-year IMTNs are guaranteed by Government of Malaysia and is exempted from rating.

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