BPA Malaysia Weekly Bond Market Report

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Trading activities continued to pick up in the local bond market as more market players returned from the Chinese New Year holidays.

Market sentiment improved as higher crude oil prices helped the Malaysian ringgit to strengthen against the greenback.

As a result, MGS yields were mostly lower for the week, and the Thomson Reuters BPAM All Bond Index climbed marginally by 0.204 per cent to 164.556 points from 164.221 points in the previous week.

US Treasury yields rose across the board at the start of the week on the back of renewed investor confidence as a new round of tariff negotiations between the US and China began in Beijing on Monday.

Risk sentiment was also boosted after congressional lawmakers announced that they have reached a deal on the US-Mexico border wall funding in order to avoid a government shutdown.

In addition, the yields on US Treasuries increased following the release of US Consumer Price Index (CPI) data for January as core consumer prices rose by 0.2 per cent month-on-month, fueling investors’ expectations for rate hikes this year.

However, most of the gains in Treasury yields were pared towards the end of the week as market players sought the safety of US Treasuries after the release of weak retail sales data.

On February 12, Bank Negara Malaysia (BNM) reported that Malaysia’s international reserves stood at US$102.1 billion as at January 31.

The reserves position is sufficient to finance 7.4 months of retained imports and is one time the total short-term external debt.

On February 14, BNM reported that Malaysia’s Gross Domestic Product (GDP) grew by 4.7 per cent year-on-year in the fourth quarter of 2018, which was above the consensus estimate of a 4.5 per cent growth.

The economic growth was driven mainly by private sector consumption and a rebound in exports of goods and services.

Full year GDP for 2018 was registered at 4.7 per cent compared to 5.9 per cent in 2017.

The top 10 most active bonds garnered a total trading volume of about RM15.8 billion, which is significantly higher compared to RM9.1 billion last week.

The off-the-run GII maturing on October 31, 2028 continue to lead the pack with a total trading volume of RM2.5 billion.

On February 12, BNM announced the tender details for the new 10-year benchmark MGS maturing on August 15, 2029.

The new 10-year benchmark MGS was issued on February 15 with an issue size of RM5 billion, in which RM1 billion was privately placed.

On February 12, DanaInfra Nasional Bhd issued six tranches of Islamic Medium Term Notes (IMTNs) with total issue size of RM3 billion.

Danum Capital Bhd issued two tranches of IMTNs with total issue size of RM1.5 billion.

The seven-year IMTN carries a profit rate of 4.3 per cent while the 15-year IMTN carries a profit rate of 4.68 per cent.

These IMTNs are rated AAA(s) with a stable outlook by RAM Ratings.

On the same day, DRB-Hicom Bhd issued a three-year IMTN with an issue size of RM265 million.