2Q2018 – Well Received New Government
The demand for short term Malaysia Government Security (MGS) increase compared to its longer term as reflected in the drop in yield of 16bps of the 3Y MGS as opposed to an increase of 2bps in the 10Y MGS from May to June’18. This is a reflection of the market uncertainty in the change in government that happened during the last election on 9 May 2018.
Federal Reserve increase the fed fund rate by 25 bp to 2% in June meeting. However, the market already anticipate the increase and the UST 10 year only rise 2 bp as at end June compared to end May 2018 yield.
MY Government Bond
MOF announce to follow its fiscal deficit to GDP target of 2.8% have help contain sentiment in the market as 10Y MGS yield normalizing around 4.20% despite the sell out in the longer-term bond as investor looking out for more certainty in the new government.
MY Corporate Bond & Sukuk
Corporate bond and sukuk in the AAA spectrum show improvement in June after more flexible policy roll out by the MOF.
1H18 issuance kept in pace with last year at RM55.0 bill compare to 1H17 at RM54.8 bill
GOVERNMENT BOND AUCTION
Total Government bond matured during the quarter is RM7.5 billion while new and reopening auction issued at RM30 billion. The take up during the quarter is decent with the average btc at 2.3401 with the highest for 7 year GII 08/25 at 3.397 btc and lowest 5 year MGS 04/23 at 1.563 btc.
For 3Q2018, there will be 2 GII maturing for August amounting to of RM17 billion and 1 MGS maturing amounting to RM11.86 billion in September. There will be 6 auction of MGS and 9 GII for next quarter.
CORPORATE BOND & SUKUK