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PETALING JAYA: Growing global appetite for Malaysian credit is expected to pave the way for more fundraising by the government and large corporates, as international investors seek relatively stable assets amid heightened global economic uncertainty.
This trend was evident last month when the government’s US$1.5bil Global Sukuk attracted more than US$9.5bil in orders from over 140 international investors, while Searah Ltd, an upstream joint venture between Petroliam Nasional Bhd or PETRONAS and Italy’s Eni SpA, secured a US$6bil syndicated revolving credit facility from a consortium of 20 international banks.
Economist Yeah Kim Leng said heightened global uncertainty has prompted investors to diversify into safer assets and rebalance their portfolios towards fixed-income securities, as they seek greater stability amid a more volatile economic environment.
“We will see more portfolio rebalancing from equities to fixed income, which is considered safer during times of uncertainty,” he told StarBiz.
He said traditional safe-haven assets, particularly those linked to the United States, have become less compelling amid uncertainties surrounding the country’s economic outlook, leading investors to seek out emerging markets with stronger growth prospects, economic resilience and risk-return profiles.
Against this backdrop, Yeah said Malaysia has emerged as an attractive destination for global investors.
He said Malaysia’s sovereign credit ratings, manageable inflation, stronger-than-expected economic growth and improving currency prospects had further boosted investor confidence.
“Malaysia attracted a lot of attention because of its strong sovereign credit rating, which has been affirmed by international rating agencies and that has helped to boost investor confidence,” he said.
“When you look at the risk-return reward, you find that Malaysia is among the top in the radar of global sovereign wealth funds as well as global investors.”
Last month, Moody’s Ratings affirmed Malaysia’s long-term local and foreign-currency issuer ratings at A3 with a “stable” outlook, while expecting the country to be the fastest-growing economy among its A-rated peers in 2026.
Malaysia is also rated A- by S&P Global Ratings and BBB+ by Fitch Ratings, with both assigning a “stable” outlook.
Meanwhile, iFast Capital assistant manager of research Kevin Khaw Khai Sheng said Malaysian bonds and sukuk were attractive to global investors, given their competitive yields and relative stability.
“Malaysian bonds are very attractive compared with many Asean countries. In fact, it’s not just Asean, it’s the Asian region,” he said.
He said Malaysian government bonds currently offered yields of around 3% to 4%, while corporate bonds could offer yields of up to about 5%, making them attractive to institutional investors seeking stable returns.
Meanwhile, Yeah said the government and large Malaysian corporates could also favour US dollar-denominated fundraising over other currencies such as the yen or yuan due to lower funding costs and the US dollar’s deep liquidity.
He said expectations of a stable or appreciating ringgit could also help reduce the repayment cost of US dollar-denominated borrowings when converted into the local currency.
“When you issue in US dollars, and if you expect your currency to remain stable or appreciate, then, of course, your repayment cost will be lower when your currency appreciates.”
iFast’s Khaw said greater issuance of US dollar-denominated instruments could help deepen liquidity in Malaysia’s bond market by broadening its investor base beyond those focused on ringgit-denominated securities, given that the US dollar is the “mainstream currency”.
From the perspective of global investors, Khaw said US dollar-denominated bonds also offered the advantage of eliminating the foreign-exchange risk for investors holding US dollars.
“Most global investors hold US dollars. If they buy ringgit-denominated bonds, besides yield, credit and duration risks, they also face currency risk,” he said.
“By issuing these kinds of US dollar bonds, they don’t need to face currency risk, which eliminates a lot of risk for them.”
Looking ahead, Khaw expects the trend of Malaysian issuers tapping international funding markets to remain “sustainable”, supported by the country’s vibrant sukuk market and continued demand from global investors.
A fund manager who declined to be named said the appeal of Malaysia’s fixed-income market could extend beyond sovereign issuers to large Malaysian corporates with significant overseas operations.
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.
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