Malaysia Bond and Sukuk : Quarterly Report 4Q 2019

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4Q2019 – MGS/GII Received the Highest Foreign Inflow

MGS/GII received RM 8.12 billion net inflow in November, the highest since November 2017, and for the year 2019. Overall for 4Q19, MGS/GII yields ended 2bps – 14bps lower than 3Q19. The trade war tension between the US and China has dissipated with phase 1 trade deal progress, which pushed US Treasuries yield higher throughout the quarter.

GLOBAL MARKET
Overview

US Treasuries declined QoQ on trade war optimism as the US and China made progress in phase 1 of the trade deal. At the end of 2019, the Fed decided to maintain rates at 1.50% – 1.75% level after 25 bps cut in October from 1.75% - 2.00% level.

MY Government Bond
Overview

MGS and GII were bullish QoQ across the curve, except for 10Y GII. Yields fell between 2bps – 14 bps for MGS, and 2bps – 7bps for GII. Overnight Policy Rate (OPR) is maintained at 3.00% level in the November MPC meeting, the last one for 2019.

MY Corporate Bond & Sukuk
Overview

Yields for corporate bond and sukuk in AAA-spectrum rallied between 3bps – 10 bps. Issuance for 4Q19 slightly lower at RM 26.29 billion.
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GOVERNMENT BOND AUCTION
Overview

 
The demand for MGS/GII in 4Q19 is softer with an average 2.058x BTC, lower than the average BTC in the previous quarter (3Q19: 2.812x BTC). The reopening 10Y MGS 08/29 auctioned in October, received the lowest BTC of 1.233x. While the reopening 20Y GII 09/39 also auctioned in October received the highest BTC of 3.320x. The total outstanding of MGS and GII as of December 2019 stood at RM 732.93 billion.

4Q19 AUCTION
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For 1Q20 MGS/GII issuance, there will be five reopening MGS auctions, four reopening GII auctions, and one new issue GII auction. One MGS will reach maturity date in March, MGS 6/2012 3.492% 31.03.2020.  

UPCOMING ISSUANCE 4Q2019
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FOREIGN HOLDINGS OF MGS AND GII
Overview 

Foreign holding of MGS and GII increased 9.1% q-o-q to the total amount of RM 185.0 billion as of December 2019. The total amount for the previous quarter, as of September 2019, was RM 169.5 billion. Foreign holding of MGS and GII for 4Q19 started with the net outflow of RM 391.6 million in October. In November, the foreign inflow of MGS and GII started to pick up jumping to RM 176.8 billion of total foreign holdings from RM 169.1 billion in October. The foreign interest for MGS and GII might be supported by investors seeking a better yield amid a low interest-rate environment.

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CORPORATE BOND & SUKUK
Overview 
 
Malaysian Corporate Bond and Sukuk issuance in 4Q19 reached RM 26.29 billion, slightly lower than the issuance amount in the previous quarter (3Q19: RM 26.47 billion). By ratings (excluding government guaranteed), AAA-rated bond is the most issued in 2019 with the total amount of RM 22.28 billion. The second most issued in 2019 is AA3-rated bonds with the issuance amount of RM 11.40 billion.







ISSUANCE 4Q2019
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RATING OUTLOOK
 
There are 4 upgraded and 1 downgraded issuers during 4Q19.
 
Upgrade
  1. Sarawak Energy Berhad
  2. Sarawak Power Generation Sdn Bhd
  3. Mukah Power Generation Sdn Bhd
  4. Premium Commerce Berhad
Downgrade
  1. MEX II SDN BHD

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BOND STATISTICS
Overview 

Outstanding Amount by Bond Classes
 
As of December 2019, the outstanding amount of Malaysian bonds is at RM1.34 trillion, with government bonds dominated by 57% of the outstanding amount. Corporate bond made up 25%, while Quasi-government made up 18% of the total of the outstanding amount.

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BOND STATISTICS
Overview 

Outstanding Amount by Principal and Bond Classes
 
As of December 2019, the government has issued more conventional bonds than Islamic bonds. The outstanding amount of conventional bonds issued by the government is at RM 394.1 billion and Islamic bonds at RM 365.6 billion. Islamic bonds dominated the outstanding amount in Corporates and quasi-government segments.
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BOND STATISTICS
Overview 

Outstanding Amount by Credit Classes
 
As of December 2019, investment-grade bonds have more issuance with AAA rating top the list at RM169.1 billion, followed by AA rating at RM167.4 billion.

Disclaimer

This report has been prepared and issued by Bond and Sukuk Information Platform Sdn Bhd (“the Company”). The information provided in this report is of a general nature and has been prepared for information purposes only. It is not intended to constitute research or as advice for any investor. The information in this report is not and should not be construed or considered as an offer, recommendation or solicitation for investments. Investors are advised to make their own independent evaluation of the information contained in this report, consider their own individual investment objectives, financial situation and particular needs and should seek appropriate personalised financial advice from a qualified professional to suit individual circumstances and risk profile.
 
The information contained in this report is prepared from data believed to be correct and reliable at the time of issuance of this report. While every effort is made to ensure the information is up-to-date and correct, the Company does not make any guarantee, representation or warranty, express or implied, as to the adequacy, accuracy, completeness, reliability or fairness of any such information contained in this report and accordingly, neither the Company nor any of its affiliates nor its related persons shall not be liable in any manner whatsoever for any consequences (including but not limited to any direct, indirect or consequential losses, loss of profits and damages) of any reliance thereon or usage thereof.

 
 
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