BPA Malaysia Weekly Bond Market Report

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For the week of October 22 to 26 2018, the Thomson Reuters BPAM All Bond Index Performance saw a sentiment of cautiousness hovered over the ringgit bond market as market players await the tabling of the new government’s first Budget. Market sentiments were also dampened by uncertainty on the international front as a result of a number of developments.

One such development is the tax cut measures announced by the Chinese government after the country reported its slowest economic growth in the third quarter. The coalition government in Rome and the European Commission in Brussels have yet to reach a common ground over Italy’s spending plans. Although the impact of the development in Italy is not significant to the global financial market, the political standoff between the Rome government and the European Union had triggered a flight to safety sentiment, resulting in investors’ aversion to riskier assets. This resulted in a global equity market rout, which then prompted investors to look for safe-haven assets such as the US Treasuries, which rallied by two to 11bps across the board on Tuesday and Wednesday.

On the back of the uncertainties observed in the global financial market, investors in the ringgit bond market also turned risk-off, thus causing the govvies yields to inch higher by one to seven bps for most tenure points.

As such, the Thomson Reuters BPAM All Bond Index weakened by 0.027 per cent to close at 160.827 points as compared to 160.871 points last week. It was announced that the Consumer Price Index for the month of September 2018 grew at a slower pace of 0.3 per cent on a year-on-year basis. Trading activities in the ringgit bond market picked up slightly with a total of RM4.9 billion trade volume recorded for the top 10 most actively traded bonds.

On October 26, 2018, BNM announced the tender details for the reopening of the 10-year benchmark GII maturing on October 31, 2028 which bears a profit rate of 4.369 per cent.

On October 23, 2018, Affin Islamic Bank Bhd issued a 10-year non-call five Tier 2 subordinated sukuk with an issuance size of RM800 million. On the same day, CIMB Group Holdings Bhd issued a RM1 billion additional Tier 1 perpetual bond. The proceeds raised from this issuance was used to subscribe to the Additional Tier 1 perpetual bond issued by CIMB Bank.

On October 26, 2018, Perbadanan Kemajuan Negeri Selangor issued a five-year sukuk with a profit rate of 5.01 per cent.

On October 22, 2018, MARC had reaffirmed its AA+IS rating on Celcom’s RM5 billion Sukuk Murabahah Programme. Concurrently, the rating outlook had been revised to stable from negative.

On October 26, 2018, RAM Ratings had revised the outlook on the AA2(s) rating of Sarawak Power Generation Sdn Bhd’s (SPG) RM215 million Serial Sukuk Musharakah (2006/2021) and Mukah Power Generation Sdn Bhd’s (MPG) RM665 million Senior Sukuk Mudharabah Programme (2006/2021), to positive from stable.