Saturday, December 3

BPA Malaysia Weekly Bond Market Report August 12 2012

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The Thomson Reuters BPA Malaysia All Bond Index inched mildly lower to 128.55 from 128.58 recorded last week. The lower reading was due to overall weakness in the MGS market, in which yields were traded higher between one to four basis points (bps) from five to 20-year tenures.

During the week, Department of Statistics Malaysia released the latest Industrial Production Index (IPI) figure, in which it has risen by 3.7 per cent year-on-year (y-o-y) in June 2012, compared to revised 7.8 per cent reading for May 2012. As usual, the 10 most actively traded bonds this week continued to be dominated by the sovereign papers with combined trade volume of approximately RM15.3 billion. The most heavily traded benchmark bond was the new three-year GII benchmark (02/2016) with registered volume of circa RM2 billion.

Looking at the details of the reopening of five-year MGS benchmark bond, on Wednesday, Bank Negara Malaysia announced the reopening of the five-year MGS benchmark bond maturing on Oct 31, 2017 with an issuance size of RM4 billion. The tender was scheduled to close on Aug 14, 2012.

On August 8, 2012, the government of Malaysia issued a new three-year GII benchmark maturing on February 2016 which carries 3.235 per cent profit rate. The issuance size was RM3.5 billion. The tender closed on Aug 7, 2012 and successfully garnered a decent bid-to-cover ratio of 1.921 times. The lowest and highest tendered yield were between 3.225 per cent and 3.238 per cent.On Aug 6, 2012, Pengurusan Air SPV Bhd issued RM200 million worth of 10-year sukuk with a profit rate of 3.90 per cent. The sukuk was rated as AAA by RAM Ratings.

On Aug 8, 2012, Sabah Development Bank Bhd issued three tranches of five, seven and 10-year bonds with coupon rate of 4.15, 4.30 and 4.55 per cent respectively. The total issuance size was RM500 million. These bonds were rated AA1 by RAM Ratings.

On the same day, AMMB Holdings Bhd (rated A1 by RAM Ratings) also issued two tranches of five and seven-year bonds with coupon rate of 4.30 and 4.50 per cent respectively.

The total issuance amount for these two tranches was RM1 billion. Additionally, Kimanis Power Sdn Bhd (rated AA- IS by MARC) issued a total of RM860 million worth of sukuk with profit rates ranging from 4.25 to 5.50 per cent. The tenures vary from four to 16 years.

On Aug 9, 2012, TSH Sukuk Ijarah Sdn Bhd (rated AA- IS by MARC) issued a new two-year sukuk with profit rate of 3.98 per cent with issuance size of RM25 million.

On Aug 8, 2012, RAM Ratings downgraded the respective ratings of MRCB Southern Link Bhd’s RM845 million Secured Senior Sukuk (2008/2025) and RM199 million Junior Sukuk (2008/2027), to A2 (from AA3) and BBB2 (from A2); both ratings remain on negative Rating Watch.

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