Robust bond issuance in March

KUALA LUMPUR: The primary corporate bond market was exceptionally active in March, with overall issuance swelling to RM23.8 billion compared to RM5.4 billion in February. This was the biggest monthly issuance since May 2019.

According to RAM Rating Services Bhd (RAM) in its notes yesterday, the count of issuers also hit a record high, with 39 entities tapping corporate bonds in March, from 9 and 22 entities in the prior two months.

“The robust activity can be partly attributed to front-loading of firms’ financing needs to lock in lower interest rates, given substantial upward pressure on bond yields in the last two months,” it said.

“The benchmark 10-year Malaysian Government Securities (MGS) yield surged 39.5 and 17.4 bps m-o-m as at end-February and end-March respectively amid global bond market sell-off in response to rising inflation expectations and brighter economic prospects.”

Meanwhile in the same month, MGS and Government Investment Issues (GII) were a robust RM16.5 billion. Concurrently, short-term government papers namely Malaysian Treasury Bills (MTB) and Malaysian Islamic Treasury Bills (MITB) also accelerated to RM6.0 billion, from RM3.5 billion in February.

RAM added that foreign demand remained resilient, with a net foreign inflow of RM5.9 billion – the eleventh successive month of net foreign purchases.

The sustained inflows li ed the proportion of foreign-held Malaysian bonds to 14.5 per cent as at end-March, the highest level since April 2018.

The robust activity can be partly a ributed to front-loading of firms’ financing needs to lock in lower interest rates, given substantial upward pressure on bond yields in the last two months.

RAM