Malaysian Bond Market

After a long weekend in the local market, the MGS curve steepened, seeing the curve adding 8.5–15.5bps across from the belly to the long-end tenure. Likewise, the GII curve went higher with yields picking up between 2bps and 10bps across all tenors.

The sell-off in the local market was driven by a risk-off environment early of the week following the attack on Saudi Arabia’s oil facility, added with the lack of dovishness from the FOMC meeting.

The week’s limelight was the reopening auction of the 7Y MGS maturing on July 2026 which garnered a weak BTC of 1.260x on the back of issuance size amounting Rm3.0bil. The auction closed with a high/low of 3.433% and 3.350% while averaging at 3.392%.

Investors shied away from the auction due to a lack of direction and the bond was sold further post-auction. As at Friday noon, the 3-, 5-, 7-, 10-, 15-, 20- and 30-year benchmark MGS yields settled at 3.11%, 3.29%, 3.45%, 3.43%, 3.67%, 3.78% and 3.93%, respectively.

The Markit iboxx ABF Malaysia Bond Index, an index comprising the MGS, GII and GG, returned -2.97% in the week Sept 13-19, 2019 as the index yield rose from 3.39% to 3.44%.

In the same period, the ABF Malaysia Bond Index Fund, an ETF which tracks the index, returned -2.96% as the fund yield rose from 3.38% to 3.42%. Month to date, the index returned - 0.314% while the fund posted a - 0.304% gain.

Activities in govvies slowed down by 38% w/w to Rm9.6bil this week compared with last week’s Rm15.5bil due to a lower volume in both MGS and GII space.

Conventional govvies trading activities dropped 43% to Rm6.5bil from Rm11.5bil, contributing 68% of the total volume trade while the GII constituted 24% of the flows at Rm2.3bil from Rm3.5bil in the prior week. The PDS space shrank 56% to Rm1.1bil from Rm2.7bil.

The GG/AAA segment contributed 63% of the trading space while the AA segment accounted for 28% and the remaining 9% was from the others segment.

Projek Lebuhraya Usahasama Bhd (PLUS) IMTN 2027–2030 tranches dominated the GG/AAA list with Rm120mil traded between 3.458% and 3.569%. These were followed by Lembaga Pembiayaan Perumahan Sektor Awam (LPPSA) IMTN 2025– 2046 papers which gobbled up Rm120mil with yields firming at 3.374%–3.949%.

Meanwhile in the AA segment, UEM Sunrise Sdn Bhd IMTN 2021– 2025 tranches traded between 3.518% and 3.881% on the back of Rm175.1mil.

Also, WCT Holdings Bhd IMTN 2023–2026 papers settled at 4.4068%– 5.159% on top of Rm141mil.