Malaysia Bond and Sukuk: Quarterly Report 1Q2023

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BIX Malaysia - Quarterly Report 1Q 2023

1Q2023 – Malaysia's bond market has demonstrated resilience despite increased market volatility

Despite the heightened market volatility, the domestic bond market remained resilient, and non-resident flows turned positive from November’22. Domestic institutional investors remained active in the government bond market, supporting market liquidity amid volatile non-resident flows. Market liquidity remained healthy, with sustained demand for government bonds in the primary market and stable liquidity conditions in the secondary market.


The 3Y UST yield was down by 41 basis points (bps) quarter-on-quarter (QoQ). The 10Y UST  also fell by 40 bps QoQ. Investors swarmed into U.S government bonds after the collapse of Silicon Valley Bank and subsequent government backstop of the banking system.

MY Government Bond

Overall, the MGS yields decreased QoQ, where the 3Y and 10Y declined by 29 bps and 16 bps, respectively. In tandem, the overall GII yields also decreased across the curve QoQ, where the 3Y dropped by 46 bps while the 10Y dropped by 17 bps. The primary factors that drove the bonds movement were safe-haven bids arising from fears of contagion from the US bank rout which overwhelmed prior month’s hawkish rhetoric by Fed officials.

MY Corporate Bond & Sukuk

The corporate bond yields decreased QoQ throughout the first quarter of 2023. The yields fell by 20 bps and 22 bps for 3-year and for 10-year, respectively.
1Q23 Market Overview


The government bond auction for 1Q23 garnered an average bid-to-cover (BTC) of 2.234x, a slight increase from the previous quarter (4Q22: 2.097x). Reopening of MGII 07/28 received the highest BTC at 3.395x. The new/reopening issuances for MGS/GII stood at RM 40.5 billion (4Q22: RM32.0 billion). 

As of March 2023, the outstanding amount of MGS/GII stood at RM1,040.56 billion (4Q22: RM979.48). The strong secondary market flows seen among local institutions that include pension funds, inter-bank participants, local GLICs, Lifers and asset management companies, plus offshore parties.
For the upcoming 2Q23, there will be three (3) reopenings and one (1) new issuance of MGS. For GII, there will be five (5) reopenings, totalling nine (9) new issuances and 

1Q23 Government Bond Upcoming Issuance
Source BNM, BPAM, BIX Malaysia


The foreign net inflow to MGS and GII in 1Q23 amounted to RM2.73 billion, RM4.97 billion and RM6.61 billion in January, February and March respectively, as foreign investors turned net buyer. As of March 2023, the total foreign holdings of MGS and GII stood at RM240.48 billion, a 6.32% increase from the previous quarter (December 2022: RM226.18 billion). 

1Q23 Foreign Holdings of MGS and GII
Source BNM

1Q23 Cumulative  Net Foreign Flow to MGS and GII
Source BNM

The total issuances of corporate bonds and sukuk were RM65.17 billion in 1Q23, a 26.0% increase from the previous quarter (4Q22: RM52.16 billion). The unrated bonds and sukuk were the most issued at RM39.01 billion issuances, followed by AA2/AA bonds at RM8.55 billion issuances.

For 1Q23, the largest corporate issuance was issued by Malaysia Rail Link Sdn. Bhd, namely the MRL ICP 181D 10.08.2023 valued at RM1.05 billion.

1Q23 Corporate Bond Issuance
Source BNM, BIX Malaysia

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

⬆️ Upgrade
  1.  Pelabuhan Tanjung Pelepas Sdn Bhd
  2. Besraya (M) Sdn Bhd
⬇️ Downgrade
  1. Pacific & Orient Insurance Co. Berhad
  2. Menara ABS Berhad

1Q23 Rating Movements
Source: MARC, RAM and BIX Malaysia


Outstanding Amount by Bond Classes

As of March 2023, the outstanding amount of the Malaysian bond market stood at RM1.92 trillion, increased by 2.67% compared to the end of 4Q22 (December 2022: RM1.87 trillion). The largest outstanding bonds were government issuances which consist of 57.0% of total issuances at RM1,092.96 billion, followed by corporate issuances of 25.6% at RM492.62 billion, and Quasi-government of 17.4% at RM333.13 billion.

1Q23 Outstanding Amount by Bond Class

Outstanding Amount by Principal and Bond Classes
As of March 2023, the outstanding amount of Government conventional bond and Government Islamic Bond (Sukuk) stood at RM554.76 billion and RM538.20 billion, respectively. The conventional Quasi-govt outstanding amount stood at RM21.92 billion, only a fraction compared to its Islamic counterpart that stood at RM311.21 billion. For corporate issuances, the conventional bond outstanding amounted to RM115.26 billion while the corporate Sukuk was recorded higher at RM377.35 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.