RM70b of federal government debt set to mature this year, say analysts

KUALA LUMPUR: A total of RM70 billion in federal government debt is expected to mature this year, said analysts, quoting the latest data from the Finance Ministry.

Of the RM70 billion, 25 per cent is to be redeemed in the first half of the year, reflecting a lower refinancing risk.

Kenanga Research said as the risk-on environment gained traction and the United States Federal Reserve decided to halt any interest rate changes, the 10-year US Treasury note average yield continued to fall.

The US note dropped by eight basis points (bps) to 2.73 per cent last month while the benchmark Malaysian 10-year Malaysian Government Securities (MGS) average yield fell by two bps to 4.06 per cent, widening the average yield spread to 133 bps last month from 127 bps in December.

Kenanga Research said foreign investors remained net sellers of Malaysia’s debt securities last month.

Total foreign holdings fell RM2.4 billion, or 1.3 per cent month-on-month, to RM182.5 billion, a tad higher than the RM2.2 billion, or 1.2 per cent, decline in the preceding month.

Consequently, the share of total foreign holdings of Malaysia’s debt inched lower to 12.9 per cent from 13.3 per cent in December, marking its lowest share since February 2010, or a 107-month record low.

Foreign holdings of MGS continued to decline, falling 1.2 per cent, or RM1.7 billion, to RM144.4 billion.

This dragged down foreign holdings’ share of total MGS to 37.6 per cent, the lowest since December 2011.

Similarly, foreign holdings of Malaysian Treasury Bills declined sharply by 34.2 per cent.