Malaysian Bond Market

Local govvies’ yields were higher across the curve in tandem with the US market. The yields climbed as market participants continued to trim their positions ahead of next week’s Monetary Policy Committee meeting, as expectations loom on Bank Negara to raise the overnight policy rate by 25 basis points (bps).

At yesterday’s 11.30am pricing, the 3-, 5-, 7-, 10-, 15-, 20- and 30-year benchmark Malaysian Government Securities (MGS) yields settled at 3.34%, 3.55%, 3.91%, 3.93%, 4.41%, 4.62% and 4.85%, respectively.

Trading activities for the benchmark local govvies faced some pull- back. Trading volume for the week stood at RM10.7bil compared to RM12.1bil in the previous week.

In the case of the secondary corporate bond market, trading activities continued to gain compared to the previous week. Week to date, total trading volume was at RM2.29bil compared to the previous week’s RM1.43bil. About 41% of the trading volume came from GG/AAA while 57% was from the AA and the balance 2% from the A segment.

In the GG/AAA segment, notable trades included 2019-2027 Prasarana Malaysia tranches, which closed with yields between 3.74% and 5.24% with a total trading volume of RM192mil. There was also interest in ‘03/18 and ‘11/22 Cagamas bond with yields higher and unchanged to 3.55% and 4.23%, respectively and a total trading volume of RM100mil.

Meanwhile, ‘04/18 and ‘05/18 Public Bank bonds also garnered interest, having recorded a trading volume of RM75mil and closed with mixed yields at 3.75% and 3.76%, respectively. Furthermore, ‘05/19 Cagamas MBS bond ended with yields higher by 17 bps at 4.08% with RM40mil changing hands.

Elsewhere in the AA segment, notable trades were seen in 20222035 Southern Power Generation tranches, which recorded a total trading volume of RM185mil with mixed yields between 4.64% and 5.51%. There was also interest in ‘12/32 Sarawak Energy bonds, which recorded 2 bps lower yields at 5.26% with a trading volume of RM150mil.

In addition, 2020-2025 BGSM Management tranches recorded a total trading volume of RM145mil and closed with lower yields between 4.45% and 4.78%. There was some interest in the banking sector with ‘08/21 CIMB Bank bonds recording lower yields by 11bps at 4.72% and a total trading volume of RM120mil changing hands.