Malaysia Bond and Sukuk: Quarterly Report 2Q2022

Malaysia Bond and Sukuk: Quarterly Report 1Q2022

2Q2022- Malaysian government bonds dominated by global inflation and rates hike

Local bond negative sentiment remains in 2Q22 influence by global inflation and rates hike. Global yields spiked and bond returns plunged in 2Q22 as central bank tightening led by the US Fed are switching to a higher gear. The Fed hiked the Fed funds rate by 50bps and 75bps in May and June 2022 FOMC meeting. Malaysia raises it OPR by 25bps in May 2022.

GLOBAL MARKET
Overview

3-year yield for the US Treasury  rose to 202 bps q-o-q while the yield on the benchmark 10-year Treasury note rose 146 bps q-o-q. This is at the back of 50 bps and 75 bps raised of Fed rate in May and June 2022.


MY Government Bond
Overview

The MGS yield increased q-o-q, where the 3-year was up by 70 bps and the 10-year rose by 66 bps. As for GII performance, the q-o-q increase across the curve by 67 bps for 3-year and 91 bps for 5-year. Bank Negara also raise its OPR by 25 bps to 2.00% in May 2022.


MY Corporate Bond & Sukuk
Overview

The corporate bond yields show fluctuations (q-o-q) throughout the first quarter of 2022. The yields rose 79 bps for 3-year and 74 bps for 10-year
2Q22 Market Overview
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GOVERNMENT BOND AUCTION
Overview

 
The government bond auction for 2Q22 garnered an average BTC of 2.509x, an increase from the previous quarter (1Q22: 1.918x). A reopening of MGII 10/25 received the highest BTC at 3.632x. The new/reopening issuances for MGS/GII stood at RM 47.0 billion (1Q22: RM 40.5 billion). 

As of June 2022, the outstanding amount of MGS/GII was at RM997.69 billion (1Q22: RM 926.34). Bond activities were still led and supported mostly by local institutions with foreign institutions seen nibling on mainly the shorter-tenured off-the-runs and benchmark 5Y, 10Y bonds.

2Q22 AUCTION
2Q22 Government Bond Auction
Source BNM, BIX Malaysia
 
There will be ten reopening MGS and GII auctions in 2Q22.  

UPCOMING ISSUANCE 3Q22
3Q22 Government Bond Upcoming Issuance
Source BNM, BPAM, BIX Malaysia
 

FOREIGN HOLDINGS OF MGS AND GII
Overview 

The foreign net flow to MGS and GII in 2Q22 amounted to -RM2.61 billion, RM0.38 billion and -RM4.29 billion respectively in April, May and June as foreign investors turn net seller. As of June 2022, the total foreign holdings of MGS and GII stood at RM229.73 billion (March 2022: RM 236.25 billion), -2.8% decrease from the previous quarter. 

2Q22 Foreign Holdings of MGS and GII2Q22 Cumulative  Net Foreign Flow to MGS and GII

CORPORATE BOND & SUKUK
Overview 
 
RM 32.79 billion corporate bonds and sukuk were issued in 2Q21 (1Q22: RM 20.85 billion), 57% increase from last quarter. The AAA rated bonds and sukuk were the most issued with RM 15.07 billion issuances. AA3/AA- bond is the second most issued with RM 4.32 billion issuances.

For this quarter, the largest corporate issuance was Public Bank Berhad, PUBLIC SUB-NOTES 3.93% 07.4.2032 Tranche 8 of RM 2.00 billion.

ISSUANCE 2Q2022
2Q22 Corporate Bond Issuance
Source BNM, BIX Malaysia

RATING OUTLOOK
 
In 2Q22, there is no defaulted. However, there are three upgraded bonds/sukuk and two downgraded bonds/sukuk in this quarter.

Upgrade
  1.  Bank Muamalat Malaysia Berhad
  2. TSH Sukuk Murabahah Sdn Bhd
  3. Zamarad Assets Berhad
Downgrade
  1. Senai-Desaru Expressway Berhad
  2. Serba Dinamik Holdings Berhad
 

2Q22 Rating Movements
Source: MARC, RAM and BIX Malaysia


BOND STATISTICS
Overview 

Outstanding Amount by Bond Classes
 

As of June 2022, the outstanding amount of the Malaysian bond market was at RM1.81 trillion. (March 2022: RM1.77 trillion). Breakdown by bond classes, the outstanding amount for government issuances stood at RM997.69 billion. The corporate and quasi-government outstanding amounts were at RM532.46 billion and RM279.88 billion, respectively.

2Q22 Outstanding Amount by Bond Class
 
BOND STATISTICS
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
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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