Up to RM105b of MGS/GII issuance expected
KUALA LUMPUR: Gross issuance of Malaysian Government Securities and Government Investment Issues (MGS/GII) is expected to be in the range of RM100 billion to RM105 billion this year, said Malaysian Rating Corp Bhd (MARC).
The domestic credit rating institution said the average issue size for each offering would be at between RM2.5 billion and RM3.3 billion in the second half of this year.
MARC did not rule out the possibility of continuing foreign outflow from MGS/GII (local govvies) in the second half, in anticipation of pressure from foreign selling in the near term, to be driven mainly by external factors.
“We also expect the size of the outflows to be reduced due to resilient global crude oil prices, greater clarity from the government on its medium-term fiscal plan and expectation of improved medium-term economic fundamentals for Malaysia,” it said in a statement.
MARC also maintained its forecast of corporate bond issuances of between RM90 billion and RM100 billion this year, despite a more aggressive than previously expected issuance of rated corporate bonds in the first half.
“Issuance from the government-guaranteed segment has been declining in recent times and we expect the trend to continue in the second half of this year due to the review of some mega projects by the government,” it said.
MARC did not expect a significant impact on the overall health of corporate bond issuance activities as there were still several large corporate bond issuances in the pipeline for the rest of the year.
It said the faltering demand of emerging market financial assets would likely persist in the remaining quarters amid concerns over rising interest rates, trade war jitters, possibility of currency devaluations worldwide and political developments in some European countries.
“However, we do not expect sharp increases in yields due to some mitigating factors, including Malaysia’s commendable economic growth and positive efforts by the new administration to address high government debt,” it added.