Commentary Of The Week
TheThomsonReutersBPAM All Bond Index gained 0.142 per cent to close at 162.421 points from 162.190 points amid year end’s window dressing activity.
The Malaysian ringgit strengthened to 4.1575 against the US dollar from 4.1790 last Friday.
In this holiday-shortened week, the MGS yields shed between one and 4bps from five-year curve point onwards save for the 10year region, in which the yield went up by 2bps.
On the global front, the US stock market experienced extreme volatility before and after the Christmas holiday.
The Dow Jones Industrial Average index tanked 653 points on the eve of Christmas and recovered most of the losses postChristmas holiday to close 1086 points higher.
That said, the US stock market has plummeted almost 10 per cent in December alone.
The market is in jittery mode as uncertainty looms over the US government shut down, the position of the Federal Reserve chairman as well as the Sino-US trade war talks.
The top 10 most active bonds shrank to RM2.8 billion from RM6.3 billion.
MGS 05/27 topped the chart with RM560 million changed hands.
On December 27, 2018, Sabah Development Bank Bhd issued a three- year and a five- year Medium Term Notes (MTN) with combined issuance size of RM115 million. The coupon rates are 5.050 per cent and 5.250 per cent respectively.
The issues are rated AA1 with stable outlook by RAM Ratings.
On December 26, 2018, RAM Ratings has revised the outlook on the long- term A1 rating of Lafarge Cement Sdn Bhd’s (Lafarge Cement or the Company) RM500 million Sukuk Wakalah Programme (2017/2024) to negative, from stable.
Lafarge Cement is a subsidiary of Lafarge Malaysia Bhd (Lafarge Malaysia or the Group), the largest player in Peninsular Malaysia’s cement industry by production capacity.
It also reflects RAM Ratings’ view that a recovery is unlikely in the near term given the lack of positive catalysts to drive cement demand.
On the same day, RAM Ratings has upgraded the rating of Premium Commerce Bhd’s (PCB or the Issuer) outstanding RM4.5 million of Class B Notes under its Notes Series 2016-A from AA2/ stable to AA1/positive.
Concurrently, they have reaffirmed the AAA/ Stable ratings of PCB’s Class A Notes under its Notes Series 2015-A and Notes Series 2016-A and Class B Notes under its Notes Series 2014A and Notes Series 2015-A.
While monthly default patterns werestillvolatile, bettercollection and recovery efforts helped keep overall average monthly default levels in line with RAM Ratings’ monthly default assumption.
Monthly prepayments had also trended higher than previously observed, somewhat alleviating earlier concerns over liquidity pressure.
Combined, these translated into better collateral support commensurate with levels required under AAA and AA1 rating stress scenarios.
The revision of the outlook on the Class B Notes from stable to positive indicates the likelihood of collateral support increasing further to a level appropriate to a higher rating if the 2016-A Pool’s performance maintains the current momentum.