Corporate bond issuance at five-year high in October

KUALA LUMPUR: Ringgit-denominated corporate bond issuance surged by 32% year-onyear to RM97.1bil in the first 10 months of 2017, marking the highest issuance year-todate since 2012.

According to Malaysian Rating Corp Bhd (MARC), the increase was led by a 34% jump in issuances in the unrated segment, of which corporate bonds made up 33%.

Issuances in the rated segment also increased significantly by 30%.

It added that corporates have been stepping up their bond issuances this year, partly to take advantage of the still favourable interest rate environment. Issuances were also spurred by a better economic outlook.

MARC expected Malaysia’s 2018 GDP growth to sustain above its long-term trend of 5%.

In October, corporate bond issuances reached RM13.8bil, with the rated segment leading fundraising activities. Issuances by the two largest issuers – Southern Power Generation Sdn Bhd’s Islamic Medium-Term Notes Sukuk Wakalah and Quantum Solar Park Semenanjung’s Green Socially Responsible Investment Sukuk – made up nearly 62% of the total rated bonds. Both issuers are rated by MARC.

Moving forward, MARC expected corporate bond issuances to normalise in line with the gradual uptrend in yields of Malaysian Government Securities and corporate bonds.