Malaysia’s net bond issuance to reach RM80 bln this year

KUALA LUMPUR: Malaysia’s net bond issuance is expected to reach RM80 billion this year, accordi ng to the Financial Markets Committee ( FMC).

In a statement, Bank Negara Malaysia ( BNM) said the size of Malaysia’s bond market relative to Gross Domestic Product (GDP) remained the largest in Southeast Asia and the third largest in Asia.

The statement was issued following the FMC’s roundtable discussion, held on March 10, on the domestic bond market development, chaired by BNM Assistant Governor Adnan Zaylani Mohamad Zahid.

BNM said participants at the roundtable remained positive on the domestic bond market as it remained resilient despite experiencing various episodes of volatility in the regional and global financial markets in recent periods.

“With the presence of domestic investors and active market making initiatives by a number of principal dealers, supported by the Financial Markets Association Malaysia, the secondary market liquidity has improved.

“The spreads between the buying and sel ling quotes for bonds are now relatively narrower at 20 to 50 sen compared to the peak of RM2 during the low liquidity period, post US elections,” it said.

It said non-resident holdings peaked at 34.7 per cent last year and have been declining to 28.7 per cent, as at end-Feb 2017, largely from shorter-term papers.

Nevertheless, the participants of the roundtable viewed that the market would be able to withstand and absorb the changes in the short-term nonresident holdings.

This was evident from well supported Government securities auctions which recorded strong average bidtocover ratio of 2.5 times in 2017, which was above the two-year average of 2.3 times. — Bernama