Malaysia Bond and Sukuk: Quarterly Report 4Q2020

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Malaysia Bond and Sukuk: Quarterly Report 4Q2020


The Covid-19 pandemic has triggered a shift to safe-haven asset like fixed-income. A declined in YTD yields for US Treasuries, MGS and GII showed a strong demand throughout the year. The Malaysian Government, MGS and GII also received a consistent net inflow from foreign investors for 8 months straight beginning May 2020. The demand also supported by dovish policy of the central banks to mitigate the economic impact of COVID-19. Bank Negara Malaysia (BNM) cumulatively deducted 125 bps of Overnight Policy Rate (OPR) in 2020.

US Treasuries declined in 4Q20. Yields were up by 1 bps-24 bps across the curve. A potential economic stimulus and US presidential election were the main attention in 4Q20.

MY Government Bond
Yields for MGS decreased q-o-q with steeper curve. The short end down by 11 bps and long end only declined to 2 bps. GII yields on the other hand surge 5 bps – 18 bps for mid to long tenure, save for 3Y.

MY Corporate Bond & Sukuk
Corporate AAA-segment declined for 5Y, 7Y an 10Y by 4 bps-13 bps. A slight increased for 3Y by 3 bps. Corporate issuance double in 4Q20 from the previous quarter with RM 43.69 billion issuances.
4Q2020 Market Overview
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The demand for MGS/GII improved from the previous quarter with the average BTC of 2.113x (3Q20: 1.983x). The reopening of GII 05/23 garnered the highest BTC with 3.093x. The gross issuance of MGS/GII in 4Q20 was RM 29.5 billion (3Q20: RM 44.6 billion) bringing the total gross issuance in 2020 to RM 151.92 billion (2019: RM 115.7 billion). As of December 2020, MGS and GII outstanding amount stood at RM 811.02 billion (September 2020: RM 796.23 billion).


4Q20 Government Bond AuctionSource BNM, BIX Malaysia
There will be five reopening MGS, two new issue GII and three opening GII auction in 1Q21.  


Government Bond UPCOMING ISSUANCE 1Q21Source BNM, BPAM, BIX Malaysia


The foreign investment net inflow to MGS and GII keeps its momentum from the previous quarter despite downgrade on Malaysia’s sovereign rating by Fitch Ratings. A RM 6.4 billion, RM 2.7 billion, RM 3.8 billion net foreign inflow respectively in October, November, and December. As of December 2020, foreign holdings of MGS/GII stood at RM 202.2 billion (September 2020: RM 189.38 billion), a 6.7% increase from the previous quarter.

4Q20 Foreign Holdings of MGS GII4Q20 Cumulative Net Foreign Flow to MGS GII

Corporate bonds doubled with RM 43.69 billion issuance in 4Q20 (3Q20: RM 24.66 billion). Nevertheless, the total corporate issuance for 2020 amounted RM 107.33 billion, a 19.8% decline from the total issuance in 2019. (2019: RM 133.86 billion).

By ratings (excluding government-guaranteed and non-rated), AAA-rated bonds dominated corporate bond space with RM 26.93 billion issued in 2020. (2019: RM 22.28 billion). This followed by AA3/AA- rated bonds with RM 13.04 billion worth of issuance this year (2019: RM 11.40 billion).

In 4Q20, the biggest corporate bond issuance is the CIMB 3.150% 12.11.2030 - Tranche 6 with RM 2.50 billion issued by CIMB GROUP HOLDINGS BERHAD.


Corporate Bond Issuance 4Q2020Source BNM, BIX Malaysia

Zero upgraded and one downgraded bonds/sukuk in 4Q20.
  1. MEX II Sdn Bhd

4Q20 Rating MovementSource: MARC, RAM and BIX Malaysia


Outstanding Amount by Bond Classes

As of December 2020, the outstanding amount of Malaysian bonds was at RM 1.56 trillion. Breakdown by bond classes, the outstanding amount for government issuances stood at RM 835.12 billion. The corporates and quasi-government issuances were at RM 426.26 billion and RM 301.59 billion, respectively.

4Q20 Outstanding Amount by Bond Classes

Outstanding Amount by Principal and Bond Classes
As of December 2020, the outstanding amount of the Government conventional bond was at RM 436.42 billion and the Government Islamic bond (SukukI) at RM 398.70 billion. The conventional Quasi-Govt outstanding amount stood at RM 17.94 billion whereas its Islamic counterpart stood at RM 283.65 billion. For corporates issuance, the conventional bond outstanding amount was at RM 117.96 billion and its Islamic sukuk was at RM 308.30 billion.

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.

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.