BPA Malaysia Weekly Bond Market Report

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Due to lack of fresh leads, ringgit bonds ended the week with mixed directions.

Profit taking activities dominated the trades following the bullish trend in the past few weeks.

In addition, market sentiment mainly remained cautious after the Finance Minister of Norway announced to cut its investment in emerging government and corporate bonds, Chile, the Czech Republic, Hungary, Israel, Malaysia, Mexico, Poland, Russia, South Korea and Thailand for the Norway’s US$1 trillion sovereign wealth fund.

This has then caused the Government curves steepened by up to 4bps from 5-year region onwards.

As a result, the Thomson Reuters BPAM All Bond Index recorded a minimal gain of 0.078 per cent to end the week at 167.551 point from 167.420 point last Friday.

On Tuesday, the International Monetary Fund (IMF) cut its outlook for global growth in 2019 from 3.7 per cent that was forecasted by IMF in October 2018 to 3.3 per cent, the lowest growth rate since the financial crisis in 2009.

The cut in global growth rate was in the view of higher tariffs caused by trade tensions between US and China, policy and growth uncertainties emerged in most advanced economies as well as tightening of financial conditions.

Top 10 most active bonds:

The ringgit bond market were observed to register a lower volume of transactions compared to last week with the top 10 most actively traded bonds recorded a total trade volume of RM8.1 billion as compared to RM8.7 billion last week.

The 10-year benchmark MGS paper maturing on August 15, 2029 topped the list with RM1.3 billion being transacted.

Sovereign auction(s):

On April 10, BNM announced the tender details for the new issue of 5.5-year benchmark GII maturing on October 15, 2024 with a tender size of RM3.5 billion.

The tender closed on April 12, with a bid-to-cover ratio of 2.313 times.

The highest, average and lowest yields came in at 3.669, 3.655 and 3.627 per cent respectively.

New issuance(s):

On April 10, IJM Corporation Bhd issued a 10-year sukuk, which is rated AA3 with stable outlook by RAM Ratings and carries a profit rate of 4.760 per cent.

The sukuk has an issuance size of RM250 million.

On the same day, Malaysia Debt Ventures Bhd issued a 10-year government guaranteed sukuk with an issuance size of RM270 million.

This sukuk carries a profit rate of 4.040 per cent.

On April 11, 2019, Lembaga Pembiayaan Perumahan Sektor Awam issued 6 tranches of government-guaranteed sukuk with a combined issuance size of RM3 billion.

The tenures of these issuances range from five-year to 30-year and carry profit rates from 3.87 to 4.8 per cent.