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Malaysia Bond and Sukuk: Quarterly Report 3Q2022
Nov 15, 2022
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3Q2022- Volatility in the bond market is expected to heighten with risks emanating from an ultra-aggressive US Fed tightening
In line with rising yields in the global bond markets, Malaysian Government Securities (MGS) yields rose – 3-year, 5-year and 10-year MGS yields to close at 3.77%, 4.04% and 4.41% for the quarter ending September 2022. Understandably, the quantum of increase in yields were much less than that of USTs as rate hike expectations in Malaysia is less aggressive.
| GLOBAL MARKET Overview 3-year yield for the US Treasury rose 126 bps q-o-q while the yield on the benchmark 10-year Treasury note rose 85 bps q-o-q. This is at the back of 75 bps raised of Fed rate in September 2022 and due to continued inflationary concerns. MY Government Bond Overview The MGS yield increased q-o-q, where the 3-year was up by 26 bps and the 10-year rose by 15 bps. As for GII performance, the q-o-q increase across the curve by 23 bps for 3-year and 16 bps for 10-year. Malaysia bond movements are still dominated by foreign-led transactions. MY Corporate Bond & Sukuk Overview The corporate bond yields show fluctuations (q-o-q) throughout the first quarter of 2022. The yields rose 29 bps for 3-year and 7 bps for 10-year. |
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GOVERNMENT BOND AUCTION
Overview
| The government bond auction for 3Q22 garnered an average BTC of 2.342x, a slightly decrease from the previous quarter (2Q22: 2.509x). A reopening of MGII 10/32 received the highest BTC at 3.105x. The new/reopening issuances for MGS/GII stood at RM 35.5 billion (2Q22: RM47.0 billion). As of September 2022, the outstanding amount of MGS/GII was at RM979.48 billion (2Q22: RM962.34). Strong secondary market activities were still led and supported mostly by local institutions that included pension funds, interbank participants, and local GLICs. In total, there were eight (8) reopening and one (1) new issuance of MGS and GII auctions in 3Q22. |
3Q22 AUCTION
Source BNM, BIX Malaysia
| For the upcoming Q422, there will be four (4) reopening of MGS and four (4) reopening of GII, totalling to eight (8) reopening. |
UPCOMING ISSUANCE 4Q22
Source BNM, BPAM, BIX Malaysia
FOREIGN HOLDINGS OF MGS AND GII
Overview
| The foreign net flow to MGS and GII in 3Q22 amounted to -RM4.67 billion, RM3.63 billion and -RM2.50 billion respectively in July, August and September as foreign investors turn net seller. As of September 2022, the total foreign holdings of MGS and GII stood at RM226.20 billion (June 2022: RM229.73 billion), -1.5% decrease from the previous quarter. |
CORPORATE BOND & SUKUK
Overview
| RM32.56 billion corporate bonds and sukuk were issued in 3Q21 (2Q22: RM32.79 billion), 0.01% decrease from the previous quarter. The AAA rated bonds and sukuk were the most issued with RM10.78 billion issuances, followed by GG bonds at RM9.30 billion issuances. For 3Q22, the largest corporate issuances were issued by CIMB Bank Berhad and CIMB Group Holdings Berhad - CIMBBANK 4.400% 08.09.2032-T2 Sukuk Wakalah S2 T1 of RM1.50 billion; and CIMB 4.400% 08.09.2032-T2 Sukuk Wakalah S2 T1 of RM1.50 billion, respectively. |
ISSUANCE 3Q2022
Source BNM, BIX Malaysia
RATING OUTLOOK
| There was no default recorded in 3Q22. However, there are two (2) upgraded bonds/sukuk and one (1) downgraded bonds/sukuk in this quarter. Upgrade
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Source: MARC, RAM and BIX Malaysia
BOND STATISTICS
Overview
Outstanding Amount by Bond Classes
| As of September 2022, the outstanding amount of the Government conventional bond and the Government Islamic Bond (Sukuk) stood at RM531.33 billion and RM508.30 billion, respectively. The conventional Quasi-govt outstanding amount stood at RM17.12 billion, only a fraction compared to its Islamic counterpart that stood at RM311.16 billion. For corporate issuances, the conventional bond outstanding amounted RM123.81 billion while the corporate Sukuk was recorded higher at RM365.45 billion. |
Overview
Outstanding Amount by Principal and Bond Classes
| The outstanding amount of the Government conventional bond was at RM527.19 billion and the Government Islamic Bond (Sukuk) at RM470.50 billion, as of June 2022. The conventional Quasi-govt outstanding amount stood at RM18.98 billion whereas its Islamic counterpart stood at RM260.91 billion. For corporate issuance, the conventional bond outstanding amount was at RM123.02 billion and its Islamic sukuk was at RM409.44 billion. |
Disclaimer
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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