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Malaysia Bond and Sukuk: Quarterly Report 1Q2021
Apr 27, 2021
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1Q2021 – SELLING PRESSURE IN THE BOND MARKET
The first quarter of 2021 started with a bloodbath in the markets. Bond yields in US Treasuries, Malaysia govvies and corporates substantially increase, indicating a major decline in prices across tenures. A reflation happened in the US with the progress of vaccination and positive economic data. There is also a pressure in the supply side of government bonds as larger issuance is expected for this year to support various stimulus to combat the COVID-19 impacts.
| GLOBAL MARKET Overview US Treasuries yields spiked by 18 – 81 bps q-o-q. A $1.9 trillion stimulus package by the US government raised concern on inflation. MY Government Bond Overview MGS/GII tracked US Treasuries performance with increased in yields by 22-69 bps q-o-q. MGS was more impacted by the decline. In March meeting, BNM decided to keep the OPR at 1.75%. MY Corporate Bond & Sukuk Overview The corporate bond yields substantially increased 50 – 90 bps q-o-q. Corporate issuance declined compared to previous quarter with RM 20.39 billion (4Q20: RM 43.69 billion) |
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GOVERNMENT BOND AUCTION
Overview
| A robust demand for MGS/GII auction at bid-to-cover ratio (BTC) of 2.161x (4Q20: 2.113x). A new issue 15Y GII 07/36 garnered the highest BTC at 2.917x. The new/reopening issuances for MGS/GII stood at RM 40.50 billion (4Q20: RM 29.50 billion). As of March 2021, the outstanding amount for MGS/GII was at RM 838.52 billion (4Q20: RM 811.02 billion). In January, Moody’s affirmed the Malaysian government's local and foreign currency long-term issuer and local currency senior unsecured debt ratings at A3, and kept its outlook at stable. |
1Q21 AUCTION
Source BNM, BIX Malaysia| There will be nine reopening MGS and GII auction in 2Q21. |
UPCOMING ISSUANCE 2Q21
Source BNM, BPAM, BIX MalaysiaFOREIGN HOLDINGS OF MGS AND GII
Overview
| For 1Q21, total foreign inflow to MGS and GII amounted RM 13.19 billion cumulatively. As of March 2021, total foreign holdings of MGS and GII stood at RM 215.34 billion (December 2020: RM 202.20 billion), a 17% increase from the previous quarter. In March review, FTSE Rusell announced to remove Malaysia from the FTSE Rusell Watch List for potential exclusion and retain Malaysia in the World Government Bond Index (WBI). |
CORPORATE BOND & SUKUK
Overview
| A RM 20.39 billion corporate bonds were issued in 1Q21 (4Q20: RM 43.69 billion). For 1Q21, the biggest issuance amount was driven by government-guaranteed. By ratings (excluding government-guaranteed and non-rated), AAA-rated bonds were the most issued with RM 6.35 billion issuance (4Q20: RM 12.36 billion). The second big issuance was AA1/AA+-rated with RM 1.10 billion issuance (4Q20: RM 2.50 billion) The largest corporate bond issuance in 1Q21 was issued by Danga Capital Berhad, a DANGA IMTN 2.960% 25.01.2028 - Tranche 11 of RM 1.50 billion. |
ISSUANCE 1Q2021
Source BNM, BIX MalaysiaRATING OUTLOOK
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One upgraded and five downgraded bonds/sukuk in 1Q21.
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Source: MARC, RAM and BIX Malaysia
BOND STATISTICS
Overview
Outstanding Amount by Bond Classes
| As of March 2021, the outstanding amount of Malaysian bond market was at RM 1.60 trillion. (December 2020: RM 1.56 trillion). Breakdown by bond classes, the outstanding amount for government issuances stood at RM 862.62 billion. The corporates and quasi-government outstanding amounts were at RM 295.89 billion and RM 440.01 billion, respectively. |
Overview
Outstanding Amount by Principal and Bond Classes
| As of March 2021, the outstanding amount of the Government conventional bond was at RM 452.92 billion and the Government Islamic bond (Sukuk) at RM 409.70 billion. The conventional Quasi-Govt outstanding amount stood at RM 17.18 billion whereas its Islamic counterpart stood at RM 278.71 billion. For corporates issuance, the conventional bond outstanding amount was at RM 121.17 billion and its Islamic sukuk was at RM 318.84 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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