BIX ARTICLE
Malaysia Bond and Sukuk: Quarterly Report 4Q2022
Feb 10, 2023
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4Q2022 – Robust Bond Market Activity in Malaysia: A Recap of 2022
In Malaysia, local government bonds saw gains due to the reopening of China and declining inflationary pressure. The sale of a 3-year government bond attracted strong demand. The corporate bond market in Malaysia saw a record high in issuances, with yields falling for all maturities. Foreign holdings of local bonds saw a decrease in net selling, with outflows slowing down compared to previous quarter.
| GLOBAL MARKET Overview 3-year yield for the US Treasury slightly decrease 3 bps q-o-q while the yield on the benchmark 10-year Treasury note shows a slightly increase on 5 bps q-o-q. UST ended weaker for the quarter due to the back of 125 bps raised of Fed rate in November and December 2022. MY Government Bond Overview The MGS yield decreased q-o-q, where the 3-year was down by 10 bps and the 10-year declined by 34 bps. As for GII performance, the q-o-q decrease across the curve by 4 bps for 3-year and 29 bps for 10-year. Yields declined as investors’ confidence in the new government’s ability to maneuver both fiscal and monetary policies. MY Corporate Bond & Sukuk Overview The corporate bond yields decrease (q-o-q) throughout the fourth quarter of 2022. The yields down 13 bps for 3-year and 27 bps for 10-year. |
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GOVERNMENT BOND AUCTION
Overview
| The government bond auction for 4Q22 garnered an average BTC of 2.097x, a slightly decrease from the previous quarter (3Q22: 2.342x). A reopening of MGII 10/25 received the highest BTC at 4.205x. The new/reopening issuances for MGS/GII stood at RM 32.0 billion (3Q22: RM35.5 billion). As of December 2022, the outstanding amount of MGS/GII was at RM979.48 billion (3Q22: RM979.48). 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 of MGS and GII auctions in 4Q22. |
4Q22 AUCTION
Source BNM, BIX Malaysia
| For the upcoming 1Q23, there will be four (4) reopening and one (1) new issue of MGS. For GII there will be two (2) new issue and three (3) reopening, totalling to ten (10) new issue and reopening. |
UPCOMING ISSUANCE 1Q23
Source BNM, BPAM, BIX Malaysia
FOREIGN HOLDINGS OF MGS AND GII
Overview
| The foreign net flow to MGS and GII in 4Q22 amounted to -RM3.95 billion, RM1.22 billion and RM2.71 billion respectively in October, November and December as foreign investors turn net seller. As of December 2022, the total foreign holdings of MGS and GII stood at RM226.18 billion (September 2022: RM226.20 billion), -0.01% decrease from the previous quarter. |
CORPORATE BOND & SUKUK
Overview
| RM52.16 billion corporate bonds and sukuk were issued in 4Q21 (3Q22: RM32.56 billion), 60.2% increase from the previous quarter. The AAA rated bonds and sukuk were the most issued with RM20.80 billion issuances, followed by AA1/AA+ bonds at RM7.85 billion issuances. For 4Q22, the largest corporate issuances were issued by United Overseas Bank (Malaysia) Berhad, UOBM MTN 3653D 27.10.2032 of RM1.00 billion. |
ISSUANCE 4Q2022
RATING OUTLOOK
| There was no default and downgrade recorded in 4Q22. However, there are four (4) upgraded 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 December 2022, the outstanding amount of the Malaysian bond market stood at RM1.87 trillion, increased by 0.54% compared to the end of 3Q22 (September 2022: RM1.86 trillion). The largest outstanding bonds were from government issuances which consist of 56.2% of total issuances at RM1,051.08 billion, followed by corporate issuances of 25.5% at RM477.53 billion, and Quasi-government of 18.3% at RM342.47 billion. |
Overview
Outstanding Amount by Principal and Bond Classes
| As of December 2022, the outstanding amount of the Government conventional bond and the Government Islamic Bond (Sukuk) stood at RM548.18 billion and RM502.90 billion, respectively. The conventional Quasi-govt outstanding amount stood at RM21.07 billion, only a fraction compared to its Islamic counterpart that stood at RM321.40 billion. For corporate issuances, the conventional bond outstanding amounted RM118.06 billion while the corporate Sukuk was recorded higher at RM359.47 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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