Ringgit bond market continued to rally since the beginning of year 2019.
Trading activities were also seen to pick up significantly in the past three weeks as most of the market players returned from the year-end holiday and started to boost their bond allocations ahead of the Lunar New Year.
During the week, heavy trading interest was observed in government, quasi government and corporate segments that resulted in lower yields across the board in these segments.
Particularly, the seven-year MGS curve point lowered by 13bps this week as a result of the new issuance of the seven-year benchmark MGS maturing on 15 July 2026.
As such, the Thomson Reuters BPAM All Bond Index gained 0.196 per cent to close at 163.437 point compared to 163.117 point last Friday. On the international front, the Brexit development in UK was the focus of the week.
On Tuesday, the government lead by the British Prime Minister Therese May faced the worst defeat in the British history with 432-202 voting to reject Brexit deal with the European Union by the House of Common.
Subsequently, Theresa May faced a confidence vote on Wednesday and she survived with the confidence motion by 19 votes only.
The uncertainties of Brexit deal in UK continues to affect the global market sentiments and market players are awaiting the next step to be taken by Theresa May before approaching the UK’s departure deadline from the EU on March 29.
The trade volume of the top 10 most actively traded bonds was decreased by about 20.6 per cent to RM10.6 billion this week compared to RM13.3 billion last week. The 20-year benchmark GII maturing on August 4, 2037 topped the list with RM1.3 billion transacted this week.
The tender for the new seven-year benchmark MGS maturing on 15 July 2026 was closed on January 14 with a bid-to-cover ratio of 2.216 times.
The highest, average and lowest yields came in at 3.914, 3.906 and 3.89 per cent respectively.
This new seven-year benchmark MGS has an issuance size of RM4 billion, in which RM500 million was privately placed to identified subscriber by Ministry of Finance.
On January 16, Cagamas Bhd issued a one-year bond with a coupon rate of 3.9 per cent.
The issue size of the bond is RM95 million and is rated AAA with stable outlook by RAM Ratings and MARC.
On January 17, Perbadanan Kemajuan Negeri Selangor issued a three-year sukuk with an issuance size of RM180 million.
This sukuk carries a profit rate of 4.742 per cent and is rated AA3 with stable outlook by RAM Ratings.
On January 16, RAM Ratings downgraded the rating of Cendana Sejati Sdn Bhd’s RM360 million Senior Sukuk Murabahah MTN Programme to C1 from BB2 while maintaining the negative outlook on the rating. The negative outlook continues to indicate the high likelihood of further multi-notch downgrades as the Senior Sukuk approaches an expected non-payment event in 2020.