Commentary Of The Week
On Thursday, Bank Negara Malaysia (BNM) decided to hold the Overnight Policy Rate (OPR) at three per cent.
According to the Monetary Policy Committee ( MPC) statement, headline inflation for the year of 2017 as a whole, is expected to be at the upper end of the forecast range and headline inflation is projected to moderate on expectations of a smaller effect from global cost factors in year 2018.
However, the headline inflation will remain highly uncertain as a result of fluctuations in the global oil prices in the future.
Core inflation, on the other hand, will be sustained by robust domestic demand.
In addition, BNM hinted that the MPC may consider reviewing the current degree of monetary accommodation given the strength of the global and domestic macroeconomic conditions.
As a result of the hawkish tone in the MPC statement, ringgit strengthened to 4.1910 from 4.2355 last Friday.
Furthermore, market players have started to price- in the possible rate hike next year and caused both MGS and GII curves shifted higher by up to nine bps.
As such, the Thomson Reuters BPAM All Bond Index ended the week with a 0.107 per cent loss at 154.388 compared to 154.554 at end of last week.
Top 10 most active bonds:
The trade volume of the top 10 most active bonds increased by 62.4 per cent to RM10.3 billion from RM6.3 billion last week.
The short term MGS maturing on March 1, 2018 topped the list with RM 3.8 billion changed hands.
New issuance(s):
On November 8, 2017, Alliance Bank Malaysia Bhd issued an Additional Tier 1 perpetual bond with a non-call period of five years.
The bond has an issuance size of RM150 million with a coupon rate of 6.25 per cent.
RAM Ratings assigned a BBB1 credit rating with a stable outlook for this perpetual bond.
Rating action(s):
On November 10, 2017, RAM Ratings has downgraded Media Chinese International Limited’s (MCIL) and Star Media Group Bhd’s (STAR) rating by one notch from AA1/Negative outlook to AA2/ Negative outlook while the rating of Media Prima Bhd (Media Prima) was downgraded by two notches from AA1/ Negative outlook to AA3/ Negative outlook.
The downgrades were to reflect the ongoing structural changes in the industry and the accelerated decline in advertising expenditure (adex), which have considerably weakened the operating performances of these three media players.
Media Prima has a steeper rating downgrade due to its weaker balance sheet relative to its peers, coupled with the poor operating performance of its TV segment.
The negative outlook on the ratings of the three media players as well as the sector has been maintained to reflect lingering concerns that adex will fall even more rapidly going forward.
In the case of Media Prima, the negative outlook also takes into account continued uncertainties over TV digitalisation.