BPA Malaysia Weekly Bond Market Report

0

On the global front, US Treasuries rallied due to risk-off sentiment as a result of political turmoil in Italy and global trade war after US imposed tariffs on metals from the European Union, Mexico and Canada.

Yields of the 10Y UST shed as much as 16bps early this week but pared gains to end 10bps lower as of Thursday.

Over to the ringgit bond market, taking cue from the stronger UST movement, the MGS yields shed by two bps to seven bps from three-year to 30-year except for the seven-year region which remained unchanged.

As such, the TR BPAM All Bond Index gained by 0.282 per cent to end the week at 157.021 points from 156.580 points last Friday.

On Thursday, Finance Minister Lim Guan Eng announced that the government expects the fiscal deficit to remain at 2.8 per cent of GDP even though the GST rate was lowered to zero per cent.

Revenue loss from GST is expected to be covered by extra revenue of RM5.4 billion from higher oil price, RM4 billion from the planned sales tax and RM5 billion from higher GLC dividends.

The trade volume for the top 10 most active bonds increased to RM9.8 billion from RM7.3 billion last week despite of the holiday shortened week.

The newly issued five-year GII maturing in November 2023 registered the highest trade volume of RM3.3 billion.

On May 30, 2018, the tender for the new issuance of the five-year benchmark GII maturing on November 30, 2023 closed with a bid-to-cover ratio of 1.989 times.

The highest, average and lowest yield came in at 4.11, 4.094 and 4.07 per cent respectively.

On May 28, 2018, MARC has placed Murud Capital’s Senior CP/MTN programme of up to RM290 million.

The programme is currently rated MARC-1/AA with a stable outlook.

The MARCWatch Negative placement reflects heightened risk of weakening in Murud Capital’s NOI following a recently announced government plan to abolish the Land Public Transport Commission (SPAD).

SPAD currently occupies 13.6 per cent of the total net lettable area (NLA) of Platinum Sentral and contributes 14.7 per cent of rental revenue per annum of the commercial building.

Any material deterioration in Murud Capital’s NOI could potentially lead to a multi-notch downgrade.

On May 30, MARC has placed the following companies issue ratings on MARCWatch Developing: Grand Sepadu (NK) Sdn Bhd, Cerah Sama Sdn Bhd, Konsortium Lebuhraya Utara-Timur (KL) Sdn Bhd, Sistem Penyuraian Trafik KL Barat Sdn Bhd, ANIH Bhd, Senai-Desaru Expressway Bhd, Projek Lebuhraya Usahasama Bhd, MEX II Sdn Bhd, Lebuhraya Duke Fasa 3 Sdn Bhd, and Projek Lintasan Sungai Besi – Ulu Klang Sdn Bhd.

The MARCWatch Developing placement reflects the increased near-term uncertainty pending full clarity on the new government’s exact plans to deliver pre-election commitments on the scrapping of toll road charges.