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Malaysia Bond and Sukuk: Quarterly Report 2Q2025


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Malaysia Bond and Sukuk: Quarterly Report 2Q2025

2Q2025 – Malaysia’s Bond and Sukuk Market shows strong growth in Q2 2025
Malaysia’s bond and sukuk market kicked off 2025 well, reaching an astounding RM2.177 trillion in outstanding issuances within the first six months. As global investors shift away from US markets, they are increasingly turning to stable and high-yielding Asian debt markets, with Malaysia emerging as a preferred destination for foreign capital. With bond yields declining in Q2 2025, extending portfolio duration could prove advantageous, as this strategy enhances capital appreciation potential. Generally, longer-duration bonds yield greater capital gains in a falling yield environment, making them a prudent consideration for optimizing returns.

GLOBAL MARKET
Overview

US Treasury 3-year yields decreased by 21 bps q-o-q while the benchmark 10-year yields was up 1 bps q-o-q. The yields reflect volatility as Trump announced a 10% "baseline" tariff on imports to the US and Fed holds rates steady with overnight borrowing rate in range between 4.25%-4.5% as it notes rising uncertainty and stagflation risk.


MY Government Bond
Overview

MGS yields declined across all tenures with 3-year dropped by 23 bps and 10-year dipped by 30 bps q-o-q. The GII yields also dropped with 3-year declined by 34 bps and 10-year slide by 27 bps q-o-q. Kenanga Research noted that the drop in local yields was primarily driven by the market actively pricing in a probable 25 bps rate cut by BNM and demand for Malaysian bonds was further bolstered by strong auction results.




MY Corporate Bond & Sukuk
Overview

AAA-rated corporate bond and Sukuk yields softened throughout the second quarter of 2025. 3-year yields declined by 13 bps q-o-q while 10-year fell by 17 bps.








 

2Q25 Market Overview


 

GOVERNMENT BOND AUCTION
Overview
 
Government bond auction for 2Q25 garnered an average BTC of 2.893x, surged from the previous quarter (1Q25: 2.886x). Reopening of MGII 7/40 marked the highest BTC at 3.362x. The new and reopening issuances of MGS/GII amounted to RM37 billion in Q2 2025, reflecting a decline of 22.97% compared to the previous quarter (Q1 2025: RM45.50 billion). While outstanding amount of MGS/GII stood at RM1.264 trillion, grew by 2.27% in 2Q 2025 (1Q25: RM1.236 trillion).

2Q25 AUCTION
2Q25 Government Bond Auction
Source BNM and BIX Malaysia
 
In the upcoming 3Q25, there will be one (1) new issuance and four (4) reopening of MGS. On the other hand, there will be one (1) new issuance and five (5) reopening of GII, totalling to two (2) new issuances and nine (9) reopening.

UPCOMING ISSUANCE 3Q25
3Q25 Government Bond Upcoming Issuance
Source BNM and BIX Malaysia
 

FOREIGN HOLDINGS OF MGS AND GII
Overview 

The foreign net flow to MGS and GII in 2Q25 amounted to RM9.73 billion, RM14.32 billion and –RM5.30 billion in April, May and June respectively, with foreign investors turned net buyer. As of June 2025, the total foreign holdings of MGS and GII stood at RM277.10 billion (March 2025: RM258.35 billion), 7.30% higher from the previous quarter.

2Q25 Foreign Holdings of MGS and GII
Source BNM

2Q25 Cumulative  Net Foreign Flow to MGS and GII
Source BNM

CORPORATE BOND & SUKUK
Overview 
RM46.62 billion corporate bonds and sukuk were issued in 2Q25 (1Q25: RM47.61 billion), 2.07% lower than the previous quarter. The AA2/AA/P1/M1-rated bonds and sukuk recorded the biggest issuance at RM15.38 billion issuances, followed by government guaranteed bonds at RM8.45 billion issuances.

For 2Q25, the largest corporate issuances were issued by LEMBAGA PEMBIAYAAN PERUMAHAN SEKTOR AWAM, namely LPPSA IMTN 4.120% 08.04.2050 - Tranche No. 13 worth RM1.33 billion.

ISSUANCE 2Q25

2Q25 Corporate Bond Issuance
Source BNM and BIX Malaysia

RATING OUTLOOK
 
There was zero (0) default and downgrade recorded in 2Q25. However, there were three (3) upgrades bonds/sukuk in the quarter.

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  1. Exsim Capital Resources Berhad
  2. Grand Sepadu (NK) Sdn Bhd
  3. Perbadanan Kemajuan Negeri Selangor
 

2Q25 Rating Movements

Source: MARC, RAM and BIX Malaysia


BOND STATISTICS
Overview 

Outstanding Amount by Bond Classes
 

As of June 2025, the outstanding amount of the Malaysian bond market stood at RM2.177 trillion, increased by 1.49% compared to the end of 1Q25 (March 2025: RM2.145 trillion). The largest outstanding bonds were from government issuances which consist of 58.40% of total issuances at RM1.271 trillion, followed by corporate issuances of 25.59% at RM557.17 billion, and Quasi-government issuances of 16.01% at RM348.59 billion.

2Q25 Outstanding Amount by Bond Class
Source: BNM and BIX Malaysia
BOND STATISTICS
Overview 

Outstanding Amount by Principal and Bond Classes
 
As of June 2025, the outstanding amount of Government conventional bond and Government Sukuk stood at RM661.11 billion and RM610.30 billion, respectively. The conventional quasi-govt outstanding amount stood at RM18.30 billion, much smaller compared to its Shariah-compliant counterpart of RM330.29 billion. For corporate issuances, the conventional bond outstanding amounted RM120.31 billion while the corporate Sukuk was recorded higher at RM436.86 billion.

2Q25 Outstanding Amount by Principal and Bond Classes
Source: BNM and BIX Malaysia

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 personalized 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.