Malaysian Bond Market
The local MGS yield curve witnessed some selling pressure across the curve with the focus at the belly to the back-end partly due to fading expectations that Bank Negara will cut the overnight policy rate (OPR) in the Nov 5 meeting. Although September’s headline inflation decelerated to 1.1% y/y from 1.5% y/y in August, signalling ample score for
Bank Negara to reduce rates in November, the weaker price pressure was due to the low-base effect as consumption tax was reintroduced in September 2018. Hence, local players decided to lighten their positions. At the point of writing, the 3-, 5-, 7-, 10-, 15-, 20- and 30-year benchmark MGS yields settled at 3.13%, 3.25%, 3.43%, 3.44%, 3.74%, 3.88% and 4.11% respectively.
Local govvies activities were down by 26% to Rm12.8bil from last week’s Rm17.2bil. Matching the pace, the MGS papers traded lower by 27% w/w to Rm7.1bil from Rm12.4bil, recording 56% of the total volume. However, interest in the GII surged 27% to Rm5.3bil from Rm4.2bil, occupying 42% of the week’s flows. MTB/MITB rose 8% to Rm358mil from Rm332mil in the prior week. On another note, trades in the secondary market declined 3% w/w to Rm1.76bil from Rm1.82bil a week earlier. The GG/AAA segment contributed 53% of the flows while the Aa-segment constituted 41% and the A-paper 6%.
Lembaga Pembiayaan Perumahan Sektor Awam (LPPSA) 2027–2046 IMTN tranches dominated the GG/ Aaa-segment at Rm335mil, trading between 3.560% and 4.131%. Besides, Danainfra Nasional Bhd’s 2027–2048 tranches gathered Rm310mil with yields closing at 3.558%–4.131%. These were followed by Perbadanan Tabung Pendidikan Tinggi Nasional (PTPTN) 2023–2041 IMTNS which traded between 3.315% and 3.991%, on the back of Rm110mil.
Meanwhile in the Aa-segment, UEM Sunrise Bhd 2020–2025 tranches gobbled up Rm231.1mil, trading between 3.371% and 3.928%. Next, Malayan Banking Bhd ‘10/25 and ‘01/31 issuances gathered Rm135mil, traded at 3.679% and 3.948%, respectively. Last but not least was United Overseas Bank (Malaysia) Bhd ‘05/25 papers with yields closing at 3.551% amounting to Rm95mil.