BIX ARTICLE
Malaysia Bond and Sukuk: Quarterly Report 2Q2021
Dec 01, 2021
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2Q2021 – DOWNSIDE RISKS CONTINUE AS CASES RISEN
The COVID-19 pandemic situation in Malaysia is worsen with new cases rise to a new high. The World Bank has revised downward Malaysia’s GDP projection to 4.5% from 6%. Malaysia’s fiscal deficit is expected to rise to between 6.5% and 7% of its GDP this year. On the inflation front, the Consumer Price Index (CPI) in April rose at its fastest pace in four years. In June, the CPI rose 3.4% due to higher fuel prices.
| GLOBAL MARKET Overview The short yield curve, 3-year US Treasuries yield rose 11 bps q-o-q. The belly curve up to 10-year yields declined 5 - 29 bps. In Fed ‘s quarterly projections, 13 of 18 officials favored at least one rate increase by the end of 2023. MY Government Bond Overview MGS and GII performance are mixed q-o-q with short 3-year yields increased 14 – 16 bps. BNM in its 4th Monetary Policy Meeting maintained the Overnight Policy Rate (OPR) at 1.75% level. MY Corporate Bond & Sukuk Overview Corporate AAA yields increased across the curve. RM 29.95 billion corporate bonds and sukuk issued in 2Q21. |
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GOVERNMENT BOND AUCTION
Overview
| The government bond auction for 2Q21 garnered an average BTC of 2.191x, a slight increase from the previous quarter (1Q21: 2.161x). A reopening of 20Y MGS 05/40 received the highest BTC at 2.651x. The new/reopening issuances for MGS/GII stood at RM 40.00 billion (1Q21: RM 40.50 billion). As of June 2021, the outstanding amount for MGS/GII was at RM 866.02 billion (1Q21: RM 838.52 billion). Economists projected the fiscal deficit percentage of GDP will be higher as the government recently announced the RM 150 billion PEMULIH stimulus package. |
2Q21 AUCTION
Source BNM, BIX Malaysia
| There will be nine reopening MGS and GII auctions in 3Q21. |
UPCOMING ISSUANCE 3Q21
Source BNM, BPAM, BIX Malaysia
FOREIGN HOLDINGS OF MGS AND GII
Overview
| The foreign inflow to MGS and GII tapered off in 2Q21 with net inflow amounted RM 5.15 billion, RM 1.75 billion and RM 0.69 billion respectively in April, May, and June. As of June 2021, the total foreign holdings of MGS and GII stood at RM 222.92 billion (March 2021: RM 215.34 billion), a 3.5% increase from the previous quarter. In June, S&P affirms Malaysia's 'A-' foreign currency and 'A' local currency ratings, but outlook remains negative. |
CORPORATE BOND & SUKUK
Overview
| RM 29.95 billion corporate bonds and sukuk were issued in 2Q21 (1Q21: RM 20.39 billion), 46.89% increase from the previous quarter. AAA-rated corporate bonds and sukuk were the most issued with RM 13.05 billion issuances. The government-guaranteed is the second most issued with RM 5.00 billion issuances. Corporate credit space in Malaysia is dominated with AAA-rated issuances with year-to-date issuance amounted to RM 19.40 billion. In 2Q21, Danainfra Nasional Berhad issued the largest amount of RM 2.0 billion DANAINFRA ICP 365D 08.04.2022 - Tranche No 5. |
ISSUANCE 2Q2021
Source BNM, BIX Malaysia
RATING OUTLOOK
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Four upgraded and one downgraded bonds/sukuk in 2Q21.
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Source: MARC, RAM and BIX Malaysia
BOND STATISTICS
Overview
Outstanding Amount by Bond Classes
| As of June 2021, the outstanding amount of Malaysian bond market was at RM 1.64 trillion. (March 2020: RM 1.60 trillion). Breakdown by bond classes, the outstanding amount for government issuances stood at RM 890.11 billion. The corporates and quasi-government outstanding amounts were at RM 436.50 billion and RM 311.08 billion, respectively. |
Overview
Outstanding Amount by Principal and Bond Classes
| As of June 2021, the outstanding amount of the Government conventional bond was at RM 475.42 billion and the Government Islamic bond (Sukuk) at RM 414.70 billion. The conventional Quasi-Govt outstanding amount stood at RM 20.25 billion whereas its Islamic counterpart stood at RM 290.83 billion. For corporates issuance, the conventional bond outstanding amount was at RM 117.25 billion and its Islamic sukuk was at RM 319.26 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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