Borneo Post Online: BPA Malaysia Weekly Bond Market Report

The Borneo Post

Looking at the Thomson Reuters BPAM All Bond Index Performance, the US Federal Reserve (Fed) left its benchmark interest rate unchanged as widely expected, acknowledging that inflation is approaching towards its two per cent target.

The Fed also emphasised on its ‘symmetric’ inflation target, suggesting its willingness to allow inflation to run above its target level before any further tightening.

Over to the Ringgit bond market, the MGS yields shed by 1bp to 14bps over the holiday-shortened week following the dovish tilted statement from the Fed, paring losses from last week, except five-year and 20-year and above region.

As such, the Thomson Reuters BPAM All Bond Index gained by 0.175 per cent to end the week at 156.957 points from 156.683 points last Friday.

Meanwhile, market focus will be on BNM’s Monetary Policy Committee (MPC) meeting scheduled to be held in the week ahead.

On Friday, the Department of Statistics Malaysia (DoSM) reported that the Malaysian exports in March this year expanded by 2.2 per cent year-on-year to RM84.5 billion while the imports declined by 9.6 per cent to RM69.8 billion during the same period. Thus, the trade surplus recorded at RM14.7 billion.

Top 10 most active bonds:

The trade volume for the top 10 bonds decreased to RM7.2 billion from RM9.2 billion last week. The off-the-run MGS paper maturing on September 28, 2018 and the three-year MGS benchmark paper maturing November 30, 2021 topped the list with a total of RM2.3 billion traded.

Sovereign Auctions:

On May 2, 2018, BNM announced the tender details for the new issue of the 15.5-year benchmark MGS maturing on November 7, 2033 with an issuance size of RM3 billion. The tender closed on 4 May 2018 with a solid bid-to-cover ratio of 2.722 times.

The highest, average and lowest yield came in at 4.653 per cent, 4.642 per cent and 4.620 per cent respectively. The MGS will be issued on May 7, 2018.

New Issuances:

On May 2, 2018, DanaInfra Nasional Bhd issued four tranches of Islamic Medium Term Notes (IMTN) amounting to RM2.5 billion. The 7-year, 10-year, 15-year, and 20-year government guaranteed notes carry profit rates ranging from 4.32 per cent to 5.08 per cent.

On May 4, 2018, Al-’Aqar Capital Sdn Bhd issued RM220 million worth of Class A IMTN and RM23 million worth of Class B IMTN, both with an expected maturity of three years. Class A and Class B IMTNs carry profit rates of 4.64 per cent and 4.95 per cent respectively.

The Class A sukuk is rated AAA while Class B sukuk is rated AA2 by RAM Ratings with a stable outlook. Additionally, they also issued two tranches of 5-non-call-3-year Class C IMTNs with total issuance size of RM332 million and profit rate of 5.600 per cent.