Malaysia Bond and Sukuk: Quarterly Report 2Q2023

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BIX Malaysia - Quarterly Report 2Q 2023

2Q2023 – Domestic bond market shows volatility as investors seek higher yields in emerging market bonds

In the second quarter of this year, the yield curve for Malaysian bonds experienced a flattening trend, reflecting the country's favorable position within emerging markets. This was driven by the United States' indication of an imminent pause in its forceful monetary policy tightening. Throughout Q2 2023, there was a consistent foreign demand for domestic bonds as investors sought attractive yields in emerging market bonds, further bolstered by market prices following the conclusion of Federal Reserve hikes.


3-year yield for the US Treasury rose by 68 bps q-o-q. The yield on the benchmark 10-year Treasury notes has also risen by 33 bps q-o-q. The US bond market revealed a complex landscape, as there was a growing anticipation that the Federal Reserve would continue raising interest rates and maintaining them at elevated levels for an extended period.

MY Government Bond

The MGS yield was mixed in q-o-q, where the 3-year was up by 12 bps and the 10-year declined by 6 bps. GII performance was also mixed, the q-o-q increase across by 18 bps for 3-year and decrease by 8 bps for 10-year. The predominant driving force behind the recent market dynamics has been the volatility observed in the rates market. The notable observation is that investors swiftly transitioned from a hawkish stance to a dovish one regarding their expectations for US monetary policy.

MY Corporate Bond & Sukuk

The corporate bond yields decrease (q-o-q) throughout the second quarter of 2023. The yields down 5 bps for 3-year and 12 bps for 10-year.
2Q23 Market Overview


The government bond auction for 2Q23 garnered an average BTC of 2.059x, a slightly decrease from the previous quarter (1Q23: 2.234x). A new issued of MGS 04/28 received the highest BTC at 2.434x. The new/reopening issuances for MGS/GII stood at RM36.0 billion (1Q23: RM40.5 billion).  

As of June 2023, the outstanding amount of MGS/GII was at RM1,063.66 billion (1Q23: RM1,040.56 billion). The strong secondary market flows seen among both local institutions that included pension funds, inter-bank participants, local GLIC’s, Lifers and asset management companies, plus offshore parties.

In total, there were one (1) new issuance and eight (8) reopening of MGS and GII auctions in 2Q23.
For the upcoming 3Q23, there will be five (5) reopening of MGS. For GII there will be five (5) reopening, totalling to ten (10) reopening.  

2Q23 Government Bond Upcoming Issuance
Source BNM, BPAM, BIX Malaysia


The foreign net flow to MGS and GII in 2Q23 amounted to –RM0.32 billion, RM3.01 billion and RM5.21 billion respectively in April, May and June as foreign investors turn net buyer. As of June 2023, the total foreign holdings of MGS and GII stood at RM248.68 billion (March 2023: RM240.48 billion), 3.41% increase from the previous quarter.  

2Q23 Foreign Holdings of MGS and GII
Source BNM

2Q23 Cumulative  Net Foreign Flow to MGS and GII
Source BNM

RM69.72 billion corporate bonds and sukuk were issued in 2Q23 (1Q23: RM65.17 billion), 6.98% increase from the previous quarter. The not rated bonds and sukuk were the most issued with RM36.39 billion issuances, followed by AA2/AA bonds at RM9.07 billion issuances.

For 2Q23, the largest corporate issuances were issued by RHB BANK BERHAD, RHBBANK IMTN 25.05.2026 of RM1.50 billion.

2Q23 Corporate Bond Issuance

2Q23 YTD Total Issuance by Ratings
Source BNM, BIX Malaysia

There was zero (0) default and two (2) upgrades recorded in 2Q23. However, there is one (1) downgraded bonds/sukuk in this quarter.

⬆️ Upgrade
  1.  Salvare Assets Bhd
  2. UniTapah Sdn Bhd
⬇️ Downgrade
  1. Tropicana Corporation Berhad

2Q23 Rating Movements
Source: MARC, RAM and BIX Malaysia


Outstanding Amount by Bond Classes

As of June 2023, the outstanding amount of the Malaysian bond market stood at RM1.96 trillion, increased by 2.08% compared to the end of 1Q23 (March 2023: RM1.92 trillion). The largest outstanding bonds were from government issuances which consist of 57.56% of total issuances at RM1,126.66 billion, followed by corporate issuances of 24.70% at RM483.50 billion, and Quasi-government of 17.74% at RM347.27 billion.

2Q23 Outstanding Amount by Bond Class

Outstanding Amount by Principal and Bond Classes
As of June 2023, the outstanding amount of the Government conventional bond and the Government Islamic Bond (Sukuk) stood at RM564.86 billion and RM561.80 billion, respectively. The conventional Quasi-govt outstanding amount stood at RM22.45 billion compared to its Islamic counterpart that stood at RM324.82 billion. For corporate issuances, the conventional bond outstanding amounted RM116.06 billion while the corporate Sukuk was recorded higher at RM367.44 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 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.