Thursday, January 20

BPA Malaysia weekly bond market report 4 March 2018

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US Treasury yields rallied as investors flight to safe haven following the announcement made by President Donald Trump on the proposed tariffs imposition of 25 per cent and 10 per cent on steel and aluminum imports respectively.

The risk-off sentiment was led by the heightened concerns on the steep import tariffs which would cause adverse effect to the US economy while triggering a possible global trade war.

The performance of local bond market was rather decent as the TR BPAM All Bond Index posted gains of 0.266 per cent, closing the week at 157.041 points from 156.625 points last Friday.

Except for the three-year point, the MGS curve shifted downwards with yields shed up to 12bps at the seven-year region. Meanwhile, the Ringgit appreciated against the greenback to close at 3.9045 on Friday compared to 3.9155 a week

ago.

On February 28, 2018, the Statistics Department of Malaysia released the Consumer Price Index (CPI) for January 2018, which rose by 2.7 per cent from a year ago. Among the major groups which recorded increase were indices for Transport (5.7 per cent), Food & Non-Alcoholic Beverages (3.8 per cent), Furnishings, Household Equipment & Routine Household Maintenance (2.6 per cent), Restaurants and Hotels (2.4 per cent), Health (2.3 per cent), Housing, Water, Electricity, Gas & Other Fuels (2.2 per cent), Education (1.2 per cent), Miscellaneous Goods & Services (0.9 per cent), Recreation Services & Culture (0.5 per cent) and Alcoholic Beverages & Tobacco (0.2 per cent).

Top 10 most active bonds:

The total trade volume for the top 10 bonds increased to RM12.1 billion from RM4.5 billion last week. The 10-year benchmark MGS maturing on November 16, 2027 topped the list with RM2.5 billion changed hands.

Sovereign auction(s):

On February 23, 2018, BNM announced the tender details for the reopening of the RM3.5 billion 10-year benchmark MGS maturing on November 16, 2027, with an additional RM500 million privately placed. The tender closed on February 27, 2018 with a decent bid-to-cover ratio of 2.066 times. The highest, average and lowest yield came in at 4.064, 4.055 and 4.036 per cent respectively.

New issuance(s):

On February 28, 2018, Cagamas Bhd issued a one-year floating rate note amounted to RM300 million, of which the floating coupon rate was determined based on a five bps spread on the three-month Kuala Lumpur Interbank Offered Rate (KLIBOR). The medium term note (MTN) is rated AAA with a stable outlook by RAM Ratings and MARC. The coupon rate for the next three months is 3.740 per cent.

On the same day, Inverfin Sdn Bhd issued a six-non-call-five-year MTN with an issuance size of RM160 million. The MTN carries a coupon rate of 4.98 per cent and is rated AAA by MARC with a stable outlook.