Malaysia Bond and Sukuk: Quarterly Report 4Q2021

Quarterly Report 4Q21

4Q2021 – Negative foreign flow for Malaysian government bond in the fourth quarter

The local bond market’s foreign flow slipped into negative territory in November after three consecutive months of positive net foreign flow as investors reacted to the hawkish stance and interest rate hike by the US Federal Reserve (FED). However, bond and sukuk performance shows slight increase in December.

GLOBAL MARKET
Overview

The short yield curve, 3-year US Treasuries yield increased 44 bps q-o-q whereas the yield curve of 10-year UST remained unchanged q-o-q.


MY Government Bond
Overview

MGS and GII performance are down q-o-q with short 3-year yields increase by, 37 bps and 34 bps, respectively. The government’s fiscal consolidation is expected to face challenges next year.


MY Corporate Bond & Sukuk
Overview

Corporate AAA performance dropped across the curve lead by the 3-year bond and Sukuk yields inching higher in anticipation of rate hikes by central bank due to inflationary concerns and economic recovery.
4Q21 Market Overview
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GOVERNMENT BOND AUCTION
Overview

 
The government bond auction for 4Q21 garnered an average BTC of 1.9941x, a decrease from the previous quarter (3Q21: 2.289x). A reopening of 15Y MGS 05/35 received the highest BTC at 3.063x. The new/reopening issuances for MGS/GII stood at RM 40.86 billion (3Q21: RM 42.5 billion). As of December 2021, the outstanding amount for MGS/GII was at RM 903.32 billion (3Q21: RM 876.32 billion).
MGS/GII tenders in 2021 were generally muted amid rising global bond yields with average BTC ratio lower at 2.07x

4Q21 AUCTION
4Q21 Government Bond Auction
Source BNM, BIX Malaysia
 
There will be nine reopening MGS and GII auctions in 1Q22.  

UPCOMING ISSUANCE 1Q22
4Q21 Government Bond Upcoming Issuance
Source BNM, BPAM, BIX Malaysia
 

FOREIGN HOLDINGS OF MGS AND GII
Overview 

The foreign inflow to MGS and GII tapered off in 4Q21 with net inflow amounted RM 5.46 billion, - RM 3.67 billion and RM 6.29 billion respectively in October, November, and December. As of December 2021, the total foreign holdings of MGS and GII stood at RM 233.96 billion (June 2021: RM 225.87 billion), a 4% increase from the previous quarter. 
As progressing to 2022, it is expected the Federal Government’s fiscal consolidation to continue facing challenges in meeting the reduced targeted fiscal deficit target of 6.0% of GDP; given the realistic growth target and revenue projection which may have some upside.

4Q21 Foreign Holdings of MGS and GII4Q21 Cumulative  Net Foreign Flow to MGS and GII

CORPORATE BOND & SUKUK
Overview 
 
RM 49.13 billion corporate bonds and sukuk were issued in 4Q21 (3Q21: RM 49.25 billion), -0.24% decrease from the previous quarter. The government-guaranteed rated bonds and sukuk were the most issued with RM 9.76 billion issuances. AAA rated is the second most issued with RM 9.13 billion issuances.
Corporate credit space in Malaysia is dominated with AAA rated issuances with year-to-date issuance amounted to RM 36.83 billion.
In 4Q21, Tenaga Nasional Berhad issued the largest amount of RM 1.2 billion.

ISSUANCE 4Q2021
4Q21 Corporate Bond Issuance
Source BNM, BIX Malaysia

RATING OUTLOOK
 
Two downgraded bonds/sukuk in 4Q21. 
 
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  1. Senai-Desaru Expressway Berhad (SDEB)
  2. Serba Dinamik Holdings Berhad
 

4Q21 Rating Movements
Source: MARC, RAM and BIX Malaysia


BOND STATISTICS
Overview 

Outstanding Amount by Bond Classes
 

As of December 2021, the outstanding amount of Malaysian bond market was at RM 1.74 trillion. (September 2021: RM 1.72 trillion).  Breakdown by bond classes, the outstanding amount for government issuances stood at RM 903.32 billion. The corporates and quasi-government outstanding amounts were at RM 519.72 billion and RM 773.24 billion, respectively.

4Q21 Outstanding Amount by Bond Class
 
BOND STATISTICS
Overview 

Outstanding Amount by Principal and Bond Classes
 
As of December 2021, the outstanding amount of the Government conventional bond was at RM 480.72 billion and the Government Islamic bond (Sukuk) at RM 422.60 billion. The conventional Quasi-Govt outstanding amount stood at RM 21.49 billion whereas its Islamic counterpart stood at RM 304.81 billion. For corporates issuance, the conventional bond outstanding amount was at RM 143.57 billion and its Islamic sukuk was at RM 629.27 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 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.
 
 
 
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