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Malaysia Bond and Sukuk: Quarterly Report 3Q2026
Oct 08, 2026
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7 min read
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3Q2026 – Malaysian Bond and Sukuk Market Surges to RM2.376 trillion
Malaysia’s bond and sukuk market maintained solid growth momentum in Q3 2026, with outstanding totalling RM2.376 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. The US Federal Reserve's 25-basis-point rate hike puts Malaysian banks' bond portfolios under scrutiny as higher global yields threaten to erode fixed-income valuations. The unanimous move where the Fed's first-rate increase since 2023 has already been reflected to some extent in Malaysia, according to Kenanga Research.
| GLOBAL MARKET Overview US Treasury 3-year & 10-year yields increased by 85 bps while 5-year yields up by 90 bps compared to previous quarter. Treasury yields have been rising as the U.S the Federal Reserve raised its benchmark interest rates for the first time since 2023 in September 2026 in a move aimed at slowing inflation that picked up again last month. The Fed’s hike of 0.25% brings the central bank’s flagship rate to between 3.75% and 4.00%. MY Government Bond Overview MGS 3-year and 10-year yields increased by 22 bps and 42 bps respectively over the previous quarter. MGS have climbed over the past year amid higher global interest rates, a bigger bond supply and expectations that stronger domestic growth and higher oil prices could eventually revive the risk of rate hikes. Bank Negara Malaysia held the Overnight Policy Rate (OPR) at 2.75% in its monetary policy announcement in September 2026. It has remained at that level since it was cut by 25 basis points in July 2025. MY Corporate Bond & Sukuk Overview AAA-rated corporate bond and Sukuk yields rose throughout the third quarter of 2026. 3-year, 5-year, 7-year and 10-year yields expanded by 48 bps, 52 bps, 59 bps and 55 bps respectively q-o-q. |
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GOVERNMENT BOND AUCTION
Overview
| Government bond auction for 3Q26 garnered an average BTC of 2.086x, decreased from the previous quarter (2Q26: 2.570x). Reopening of MGII 10/31 marked the highest BTC at 2.402x. The new and reopening issuances of MGS/GII amounted to RM50.0 billion in Q3 2026, reflecting same number of new and reopening issuances compared to the previous quarter (2Q26: RM50.0 billion). The outstanding amount of MGS/GII stood at RM1.349 trillion and declined by 0.15% in Q3 2026 (2Q26: RM1.351 trillion). |
3Q26 AUCTION
| In the upcoming 4Q26, there will be three (3) reopenings and one (1) new issue of MGS. There will be four (4) reopenings of GII, totalling to seven (7) reopenings and one (1) new issue of MGS and GII. RAM Ratings said Malaysian Government Securities (MGS) and Government Investment Issues (GII) attracted combined net foreign purchases of RM10.6 billion, the largest monthly inflow into the segment since May 2025. |
UPCOMING ISSUANCE 4Q26
FOREIGN HOLDINGS OF MGS AND GII
Overview
| The foreign net flow to MGS and GII in 3Q26 amounted to -RM7.77 billion, RM10.62 billion and -RM4.98 billion in July, August and September respectively, with foreign investors turn to net seller. As of September 2026, the total foreign holdings of MGS and GII stood at RM276.73 billion (June 2026: RM278.86 billion), 0.76% lower from the previous quarter. |
CORPORATE BOND & SUKUK
Overview
| RM68.50 billion corporate bonds and sukuk were issued in 3Q26 (2Q26: RM73.22 billion), 6.89% lower than the previous quarter. AA2/AA/P1/M1-rated bonds and sukuk recorded the biggest issuance at RM22.84 billion issuances, followed by AAA-rated bonds at RM17.39 billion issuances. For 3Q26, the largest corporate issuances were issued by MAYBANK AGEAS HOLDINGS BERHAD, namely AGEAS S2 4.590% 25.09.2036 worth RM2.10 billion. |
ISSUANCE 3Q26
RATING OUTLOOK
| There were zero (0) defaults recorded in 3Q26. However, there were seven (7) upgrades and one (1) downgrade for bonds/sukuk in the quarter. ⬆️ Upgrade
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Source: MARC, RAM, FAST and BIX Malaysia
BOND STATISTICS
Overview
Outstanding Amount by Bond Classes
| As of September 2026, the outstanding amount of the Malaysian bond market stood at RM2.376 trillion, an increase of 0.935% compared to the end of 2Q26 (June 2026: RM2.354 trillion). The largest outstanding bonds were from government issuances which consist of 57.20% of total issuances at RM1.359 trillion, followed by corporate issuances of 26.67% at RM633.75 billion, and Quasi-government issuances of 16.13% at RM383.35 billion. |
Overview
Outstanding Amount by Principal and Bond Classes
| As of September 2026, the outstanding amount of Government conventional bond and Government Sukuk stood at RM715.10 billion and RM644.30 billion, respectively. The conventional quasi-govt outstanding amount stood at RM18.88 billion, much smaller compared to its Shariah-compliant counterpart of RM364.47 billion. For corporate issuances, the conventional bond outstanding amounted to RM146.80 billion while the corporate Sukuk was recorded higher at RM486.95 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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