BIX ARTICLE
Malaysia Bond and Sukuk: Quarterly Report 2Q2022
Aug 01, 2022
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2Q2022- Malaysian government bonds dominated by global inflation and rates hike
Local bond negative sentiment remains in 2Q22 influence by global inflation and rates hike. Global yields spiked and bond returns plunged in 2Q22 as central bank tightening led by the US Fed are switching to a higher gear. The Fed hiked the Fed funds rate by 50bps and 75bps in May and June 2022 FOMC meeting. Malaysia raises it OPR by 25bps in May 2022.
GOVERNMENT BOND AUCTION
Overview
The government bond auction for 2Q22 garnered an average BTC of 2.509x, an increase from the previous quarter (1Q22: 1.918x). A reopening of MGII 10/25 received the highest BTC at 3.632x. The new/reopening issuances for MGS/GII stood at RM 47.0 billion (1Q22: RM 40.5 billion). As of June 2022, the outstanding amount of MGS/GII was at RM997.69 billion (1Q22: RM 926.34). Bond activities were still led and supported mostly by local institutions with foreign institutions seen nibling on mainly the shorter-tenured off-the-runs and benchmark 5Y, 10Y bonds. |
There will be ten reopening MGS and GII auctions in 2Q22. |
FOREIGN HOLDINGS OF MGS AND GII
Overview
The foreign net flow to MGS and GII in 2Q22 amounted to -RM2.61 billion, RM0.38 billion and -RM4.29 billion respectively in April, May and June as foreign investors turn net seller. As of June 2022, the total foreign holdings of MGS and GII stood at RM229.73 billion (March 2022: RM 236.25 billion), -2.8% decrease from the previous quarter. |
RM 32.79 billion corporate bonds and sukuk were issued in 2Q21 (1Q22: RM 20.85 billion), 57% increase from last quarter. The AAA rated bonds and sukuk were the most issued with RM 15.07 billion issuances. AA3/AA- bond is the second most issued with RM 4.32 billion issuances. For this quarter, the largest corporate issuance was Public Bank Berhad, PUBLIC SUB-NOTES 3.93% 07.4.2032 Tranche 8 of RM 2.00 billion. |
RATING OUTLOOK
In 2Q22, there is no defaulted. However, there are three upgraded bonds/sukuk and two downgraded bonds/sukuk in this quarter. Upgrade
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BOND STATISTICS
Overview
Outstanding Amount by Bond Classes
As of June 2022, the outstanding amount of the Malaysian bond market was at RM1.81 trillion. (March 2022: RM1.77 trillion). Breakdown by bond classes, the outstanding amount for government issuances stood at RM997.69 billion. The corporate and quasi-government outstanding amounts were at RM532.46 billion and RM279.88 billion, respectively. |
Overview
Outstanding Amount by Principal and Bond Classes
The outstanding amount of the Government conventional bond was at RM527.19 billion and the Government Islamic Bond (Sukuk) at RM470.50 billion, as of June 2022. The conventional Quasi-govt outstanding amount stood at RM18.98 billion whereas its Islamic counterpart stood at RM260.91 billion. For corporate issuance, the conventional bond outstanding amount was at RM123.02 billion and its Islamic sukuk was at RM409.44 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.