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Malaysia Bond and Sukuk: Quarterly Report 2Q2026
Jul 10, 2026
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7 min read
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2Q2026 – Malaysian Bond and Sukuk Market Surges to RM2.354 trillion
Malaysia’s bond and sukuk market maintained solid growth momentum in Q2 2026, with outstanding totalling RM2.354 trillion. Domestic institutional demand remains robust, with strong participation from banks, asset managers, and pension funds like the Employees Provident Fund, anchoring the government bond curve. According to Fitch, yields on Malaysian government debt have remained stable so far in 2026 despite global volatility. Local institutional investors continue to anchor the Malaysia’s bond and sukuk market, while the foreign investor participation has been broadly maintained despite macroeconomic volatility following the onset of the Iran conflict.
| GLOBAL MARKET Overview US Treasury 3-year & 10-year yields increased by 34 bps & 14 bps respectively compared to previous quarter. Treasury yields have been rising as the U.S.-Iran conflict that erupted in late February was the primary catalyst which sent crude prices surging over 50%. This energy shock drove headline CPI inflation from 2.4% in February to 4.2% by May, forcing the bond market to reprice inflation risk significantly higher. MY Government Bond Overview MGS 3-year and 10-year yields were slightly down by 1 bp and 3 bps respectively over the previous quarter. According to Kenanga Research, local government bond yields were mixed but generally trended lower, supported by easing geopolitical tensions and sustained investor demand for longer-duration assets. They added that the US-Iran agreement and the reopening of the Strait of Hormuz contributed to lower oil prices, helping to ease inflation concerns and improve overall risk sentiment. MY Corporate Bond & Sukuk Overview AAA-rated corporate bond and Sukuk yields rose throughout the second quarter of 2026. 3-year, 5-year, 7-year and 10-year yields expanded by 4 bps, 6 bps, 4 bps and 6 bps respectively q-o-q. |
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GOVERNMENT BOND AUCTION
Overview
| Government bond auction for 2Q26 garnered an average BTC of 2.570x, increased from the previous quarter (1Q26: 2.215x). Reopening of MGII 07/40 marked the highest BTC at 3.410x. The new and reopening issuances of MGS/GII amounted to RM50.0 billion in Q2 2026, reflecting a surge by 11.11% compared to the previous quarter (1Q26: RM45.0 billion). The outstanding amount of MGS/GII stood at RM1.351 trillion and grew by 3.21% in Q2 2026 (1Q26: RM1.309 trillion). |
2Q26 AUCTION
| In the upcoming 3Q26, there will be five (5) reopenings of MGS. Similarly, there will be five (5) reopenings of GII, totalling to ten (10) reopenings. Bernama quoted that banking demand underpinned the belly and long end, while the ultra-long end cheapened as investors demanded higher risk premia in anticipation of heavier duration supply in the second quarter of 2026 (2Q 2026). |
UPCOMING ISSUANCE 3Q26
FOREIGN HOLDINGS OF MGS AND GII
Overview
| The foreign net flow to MGS and GII in 2Q26 amounted to RM48.79 million, -RM6.94 billion and RM2.64 billion in April, May and June respectively, with foreign investors turn to net seller. As of June 2026, the total foreign holdings of MGS and GII stood at RM278.86 billion (March 2026: RM283.10 billion), 1.50% lower from the previous quarter. |
CORPORATE BOND & SUKUK
Overview
| RM73.22 billion corporate bonds and sukuk were issued in 2Q26 (1Q26: RM57.29 billion), 27.81% higher than the previous quarter. Non-rated bonds and sukuk recorded the biggest issuance at RM21.51 billion issuances, followed by AA2/AA/P1/M1-rated bonds at RM21.24 billion issuances. For 2Q26, the largest corporate issuances were issued by URUSHARTA JAMAAH SDN BHD, namely UJSB IMTN 3.825% 29.05.2036 worth RM11.51 billion. |
ISSUANCE 2Q26
RATING OUTLOOK
| There were zero (0) defaults recorded in 2Q26. However, there were three (3) upgrades and one (1) downgrade for bonds/sukuk in the quarter. ⬆️ Upgrade
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Source: MARC, RAM and BIX Malaysia
BOND STATISTICS
Overview
Outstanding Amount by Bond Classes
| As of June 2026, the outstanding amount of the Malaysian bond market stood at RM2.354 trillion, an increase of 2.75% compared to the end of 1Q26 (March 2026: RM2.291 trillion). The largest outstanding bonds were from government issuances which consist of 57.86% of total issuances at RM1.362 trillion, followed by corporate issuances of 25.97% at RM611.44 billion, and Quasi-government issuances of 16.16% at RM380.55 billion. |
Overview
Outstanding Amount by Principal and Bond Classes
| As of June 2026, the outstanding amount of Government conventional bond and Government Sukuk stood at RM710.93 billion and RM651.30 billion, respectively. The conventional quasi-govt outstanding amount stood at RM19.44 billion, much smaller compared to its Shariah-compliant counterpart of RM361.11 billion. For corporate issuances, the conventional bond outstanding amounted to RM141.47 billion while the corporate Sukuk was recorded higher at RM469.97 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 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.
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