Monday, May 20

BPA Malaysia Weekly Bond Market Report

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Despite the festive holiday-shortened week, the Malaysian ringgit bond market was bullish on the back of dovish US Federal Reserve stance with regards to its monetary policy.

The Malaysian Government Securities (MGS) yield curve bull-flattened and saw the yields shed from 1bp to 11bps across the board.

As a result, the Thomson Reuters BPAM All Bond Index added 0.287 per cent to close at 164.221 point from 163.751 point last week.

The Malaysian ringgit continued to strengthen against the greenback to close at 4.0675 from 4.0905 last week.

Top 10 most active bonds:

The top 10 most active bonds rose to RM9.1 billion from RM6.6 billion in the previous week.

The off-the-run GII maturing on October 31, 2028 recorded the highest trade volume of RM1.3 billion.

New issuance(s):

On February 7, Pengurusan Air SPV Bhd (PASB) issued three tranches of Islamic Medium Term Notes (IMTN) with tenures of three, four and five years and profit rates of 4.19, 4.22, and 4.3 per cent respectively.

The issues are rated AAA with stable outlook by RAM Ratings.

On the same day, PASB also issued seven-year and 10-year IMTNs with profit rates of 4.15 and 4.34 per cent respectively that are guaranteed by the Malaysian Government and thus rating-exempted.

Rating action(s):

On February 7, MARC has affirmed its AAIS rating on ANIH Bhd’s RM2.5 billion Senior Sukuk Musharakah Programme.

Concurrently, the rating outlook has been revised to stable from negative.

ANIH is the concessionaire of Kuala Lumpur-Karak Highway (KL-Karak) and Phase 1 of East Coast Expressway (ECE1) until 2032.

The outlook revision to stable reflects the steady traffic growth on KL-Karak and ECE1 that would remain supportive of the company’s cash flow generation to meet the concessionaire’s finance service obligations.

The rating agency views ANIH to be in a better position than other similar toll concessionaires to weather any shifts in the prevailing regulatory environment for the domestic toll industry in the intermediate term.

While the government recently announced compensation in lieu of deferred toll hikes in 2019, MARC views this as an interim measure.

The rating agency expects ANIH to continue to demonstrate a commendable liquidity profile by maintaining healthy cash balance levels.

The rating also benefits from the subordinated and equity-like features of ANIH’s RM620 million Junior Bonds that allow it to withstand moderate operational underperformance.