The ringgit bond market started the week in a bearish tone with the Thomson Reuters BPAM All Bond Index plunged 0.53 per cent to 136.42 on Wednesday from 137.15 last Friday. This was mainly due to the bearish movement in the MGS segment as ringgit continued to weaken on the back of falling oil prices. The MGS in the 15-year region suffered the most as the yield of the re-opened 15-year benchmark MGS shot up 18bps to 4.599 per cent on Wednesday from 4.42 per cent last Friday.
Towards the end of the week, the ringgit bond market had recovered more than half of the losses incurred in the beginning of the week, mostly due to the strengthening of the ringgit as well as bargain hunting activities undertaken by market players. As a result, the Thomson Reuters BPAM All Bond Index closed at 136.87 on Friday, which is 0.33 per cent higher than Wednesday’s index level.
During the week, the Ministry of International Trade and Industry announced that Malaysia’s exports in November 2014 improved by 2.1 per cent. This was mainly supported by higher exports of electrical and electronics products followed by chemicals and chemical products as well as iron and steel products. As such, trade surplus registered at RM11.13 billion, the highest value since November 2011.
Meanwhile, Bank Negara Malaysia released that Malaysia’s international reserves fell US$18.9 billion to US$116 billion as at end-December 2014 from the US$134.9 billion a year ago. This was mainly due to sharp outflows in the financial account in 2014 as a result of monies flew out from the country when the US quantitative easing programme ended in October. The outflows were further exacerbated by the lower oil prices that caused ringgit to depreciate significantly.
The total volume of the top 10 most actively traded bonds increased significantly from RM4.1 billion last week to RM15.5 billion this week. The reopened 15-year benchmark MGS topped the list with RM3.43 billion changed hands, followed by seven-year benchmark MGS, which recorded a total trade volume of RM2.9 billion.
On Monday, Bank Negara Malaysia announced the tender details for the re-opening of RM2.5 billion 15-year benchmark MGS, which maturing on April 15, 2030. The tender closed on January 7, 2015 with a decent bid-to-cover ratio of 2.368 times. The highest, lowest and average yields are 4.714, 4.66, and 4.697 per cent.
On January 9, 2015, MARC had reaffirmed the rating of Alam Maritim Resources Bhd’s RM500 million Sukuk Ijarah Medium-Term Notes at A+. At the same time, the outlook of the sukuk is revised to negative from stable.
The negative outlook reflects a decline in revenue and consolidated earnings during the nine months ended September 2014 and the softening industry trends in the offshore support vessel (OSV) segment as well as the recent sharp slump in oil prices which increases the potential for wider financial performance volatility.
BPA MALAYSIA WEEKLY BOND MARKET REPORT