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Malaysia Bond and Sukuk: Quarterly Report 1Q2020
May 21, 2020
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1Q2020 – Risk-Off Mode Amid COVID-19 Pandemic
The unprecedented COVID-19 pandemic has caused a gloomy economic outlook and risk-off sentiment in the financial market. There was a selling pressure on MGS and GII as foreign investors flocked to US Treasuries on safe-haven bids. In the 1Q20, Bank Negara Malaysia (BNM) has cut OPR by 50 bps to 2.25% - 2.75% level.
| GLOBAL MARKET Overview Demand for US Treasuries surged with yields across the curve declined 122 bps – 133 bps q-o-q. In 1Q20, the Fed has cut down rate by 150 bps to 0%-0.25% level. MY Government Bond Overview The MGS and GII yields increased 22 bps – 59 bps in March as foreign selling heightened with RM 12.4 billion outflows cumulatively. On q-o-q basis, yields decreased 7 bps – 23 bps on the short and medium tenure of the curve. On the longer tenure, yields rose 1 bps - 5 bps. MY Corporate Bond & Sukuk Overview AAA-rated corporate bond and sukuk also received selling pressure with yields rose 3 bps – 20 bps q-o-q on medium and longer tenure of the curve. |
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GOVERNMENT BOND AUCTION
Overview
| The demand for MGS/GII in 1Q20 is higher than the previous quarter with an average 2.460x BTC (4Q19: 2.058x BTC). The reopening 15Y GII 11/34 auctioned in January, received the highest BTC at 3.396x. While the 10Y MGS 08/29, auctioned in February recorded 2.036x BTC, the lowest BTC for this quarter. The total outstanding of MGS and GII as of March 2020 stood at RM 760.73 billion (December 2019: RM 732.93 billion) |
1Q20 AUCTION
Source BNM, BIX Malaysia
| There will be four MGS issuances (three reopening and one new issue) and four GII issuances (three reopening and one new issue) in 2Q20. Six GIIs will mature in 2Q20. |
UPCOMING ISSUANCE 2Q20
Source BNM, BPAM, BIX Malaysia
FOREIGN HOLDINGS OF MGS AND GII
Overview
| Foreign holding of MGS and GII declined 9.1% q-o-q to the total amount of RM 168.1 billion as of March 2020 (December 2019: RM 185.0 billion). There were net foreign outflows for two consecutive months in February and March with the total outflows RM 7.6 billion and RM 12.4 billion, respectively. MGS accounted for most of the net outflows with RM 16.2 billion q-o-q, whereas GII had RM 0.6 billion net outflows q-o-q. |
CORPORATE BOND & SUKUK
Overview
| For the 1Q20, the corporate segment has issued RM 22.04 billion worth of bonds/sukuk (4Q19: RM 26.29 billion). By ratings (excluding government-guaranteed and non-rated), AAA-rated bond was the most issued with the total amount of RM 2.95 billion. The second most issued was AA3-rated bonds with the issuance amount of RM 2.82 billion. Khazanah Nasional Berhad was the biggest issuer with RM 2.90 billion non-rated bond. |
ISSUANCE 1Q2020
.PNG "Corporate Bond & Sukuk Issuance 1Q2020")
Source BNM, BIX Malaysia
RATING OUTLOOK
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There are 0 upgraded and 1 downgraded bonds/sukuk in 1Q20.
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Sources: MARC, RAM and BIX Malaysia
Overview
Outstanding Amount by Bond Classes
| As of March 2020, the outstanding amount of Malaysian bonds is at RM1.38 trillion, with government bonds dominated by 57% of the outstanding amount. Corporate bond made up 25%, while Quasi-government made up 18% of the total of the outstanding amount. |
BOND STATISTICS
Overview
Outstanding Amount by Principal and Bond Classes
| As of March 2020, Government conventional bond has higher outstanding amount at RM 401.63 billion compared to Government Islamic bond (Sukuk) with RM 385.90 billion outstanding amount. Islamic bonds (Sukuk) dominates Quasi-Govt and Corporates classes with an outstanding amount of RM 231.82 billion and RM 252.31 billion, respectively. |
.PNG "Outstanding Amount by Principal and Bond Classes")
Overview
Outstanding Amount by Credit Classes
| As of March 2020, AA-rated bond had the highest outstanding amount at RM 169.33 billion, followed by AAA-rate bond with RM 169.32 billion outstanding amount. For non-investment grade bonds, the outstanding amount of BB-rated bond and below was cumulatively at RM 2.8 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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