Commentary Of The Week
The local bond market was muted throughout the week, as market players remained focused on the policies to be implemented by the new government.
Besides that, market players stayed on the sidelines ahead of major events next week, which includes the Federal Open Market Committee ( FOMC) meeting, European Central Bank (ECB) meeting, as well as the longplanned summit between US President Donald Trump and North Korean leader Kim Jongun.
In spite of the subdued mood in the local bond market, the Thomson Reuters BPAM All Bond Index saw a slight increase of 0.051 per cent to 157.101 points from 157.021 points last week.
Meanwhile, US Treasury yields rose across the board following the recent release of strong US jobs data which boosted investors’ expectations of further rate hikes later this year.
In addition, US Treasury yields rose midweek alongside its eurozone peers following the selloff in the Eurozone bond market, as expectations that the European Central Bank will end its asset purchase programme this year pushed borrowing costs higher across Eurozone.
However, some of the gains in Treasury yields were pared towards the end of the week on the back of rising trade tensions ahead of the Group of Seven (G7) summit which stoked safe-haven demand.
Malaysia’s April exports grew significantly by 14 per cent to RM84.2 billion on a year-on-year basis, exceeding forecast of a 6.3 per cent gain, and outpacing imports which grew by 9.1 per cent to RM71.2 billion.
As a result, Malaysia’s trade surplus widened to RM13.1 billion from RM14.7 billion in the prior month.
According to the Department of Statistics Malaysia, the surge in exports was attributed to the growth in exports to Hong Kong, China, European Union, Thailand and Taiwan.
The top 10 most active bonds garnered a total trading volume of about RM4.5 billion, which is much lower compared to RM9.8 billion last week.
The off-the-run MGS maturing on September 28, 2018 led the pack, with total trading volume of RM943 million.
OnJune5,2018,BNMannounced the tender details for the new issue of the 20-year benchmark MGS maturing on June 8, 2038.
The tender closed on June 7, 2018 and garnered a fairly solid bid-to-cover ratio of 1.942 times, which is slightly higher than the 1.905 times cover seen during the tender for the previous 20-year benchmark MGS early this year. The highest, average and lowest yields came in at 4.906, 4.893 and 4.866 per cent respectively.
The new 20-year benchmark MGS was issued on June 8, 2018 at an issuance size of RM2.5 billion.
On June 6, 2018, Pengurusan Air SPV Bhd issued five tranches of Islamic Medium Term Notes (IMTNs) with total issuance size of RM2.1 billion.
The tenures of the IMTNs range from three years to seven years, and the profit rates of the IMTNs range from 4.2 to 4.56 per cent.
These IMTNs are guaranteed by the Government of Malaysia, and thus they are exempted from ratings.