Malaysian Bond Market

Selling pressure was felt when the Malaysian Government Securities (MGS) segment rose 1.5–4.5 bps, save for the 5Y yield that eased 2 bps during the week. The Government Investment Issue (GII) curve added 1.3 bps on average.

Bank Negara unexpectedly reduced 50 bps in the SRR. The cut is expected to provide some relief to banks in terms of better liquidity management and positive for loan growth and economic activities.

However, the positive impact on the overall economic activities will depend much on the demand for credit. Additionally, the new issuance of the 3Y GII maturing on May 2023 garnered a strong bid-to-cover of 2.38 times on the back of an issuance size amounting to Rm4bil. The auction closed with a high/low of 3.158% and 3.143% while averaging at 3.151%.

At the point of writing, the 3-, 5-, 7-, 10-, 15-, 20- and 30-year benchmark MGS yields settled at 3.04%, 3.20%, 3.37%, 3.44%, 3.67%, 3.80% and 4.03% respectively.

Local govvies activities shrank 45% to Rm11.5bil from last week’s Rm20.7bil. Matching the pace, the GII papers traded lower by 41% week-onweek (w-o-w) to Rm3.9bil from Rm6.6bil, recording 34% of the total volume. Interest in the MGS fell 47% to Rm7.3bil from Rm13.8bil, occupying 64% of the week’s flows.

MTB/MITB trading activities slipped 31% to Rm212mil from Rm308mil in the prior week. Sukuk Perumahan Kerajaan (SPK) climbed 400% to Rm50mil from Rm10mil. On another note, the secondary market dropped 16% w-o-w to Rm1.9bil from Rm2.3bil. The GG/AAA segment contributed 64% of the flows, the Aa-segment made up 32% and the A papers 4%.

In the GG/AAA segment, Danainfra Nasional Bhd 2023–2047 tranches dominated the list with Rm565mil, trading 3.422%–3.269%. Besides, Turus Pesawat Sdn Bhd 2027–2028 Islamic medium-term notes (IMTNS) gathered Rm220mil with yields closing between 3.690% and 3.726%.

These were followed by Lembaga Pembiayaan Perumahan Sektor Awam 2025–2028 IMTNS accumulating Rm130mil at 3.510%–3.657%

In the Aa-segment, IJM Corp Bhd 2020–2029 tranches gobbled up Rm192mil, changing hands between 3.509% and 4.329%. Next, Imtiaz Sukuk II Bhd ‘11/21 and ‘05/22 IMTNS gathered Rm120mil trading at 3.568% and 3.661%, respectively.

Lastly, 2023–2025 UEM Sunrise Bhd tranches traded between 3.666% and 3.928% amounting to Rm54.5mil.