Malaysian Bond Market
The local bond market continued its momemtum from last week amid the strengthening ringgit. Most of the buying flows matched profit takers which resulted in a tight price action across the curves.
On the other hand, the new 10-year Government Investment Issue (GII) auction received a very strong bid-to-cover (BTC) of 4.07 times, the highest ever seen over the past few years, despite the larger-than-usual issuance size of RM5bil, including a RM1.5bil placed privately.
The new benchmark has a high/ low spread of 2.5 bps and averaging at 4.13%. Volume surged 68.5% to RM24.49bil from last week’s RM14.53bil.
Flows were spread between Malaysia Government Securities (MGS) and GII with the ratio of 54% and 43.4% while the remaining 2.6% were on SPK and MTB/MITB segments.
As at yesterday afternoon, the 3-, 5- ,7- ,10- ,15- ,20- and 30-year benchmark MGS yield settled at 3.57%, 3.74%, 3.97%, 4.07%, 4.40%, 4.57% and 4.80% respectively.
In the domestic exchange-traded fund (ETF) space, the Markit iBoxx ABF Malaysia Bond Index, an index comprising MGS, GII and GG, returned 0.263% in the week from Jan 4, 2019 to Jan 10, 2019 as the index yield fell from 4.08% to 4.07%.
In the same period, the ABF Malaysia Bond Index Fund, an ETF which tracks the index, posted a return of a 0.270% rise in the net asset value as the fund yield remained unchanged at 4.05%.
The total volume for the private debt securities (PDS) segment rebounded 162.4% from last week’s RM1.4bil to RM3.7bil. The GG/AAA segment was mostly traded as it attributed about 38.5% of this week’s trade with the AA and A segments contributing 35.3% and 26.2%, respectively.
In the GG/AAA segment, flows were focused on Pengurusan Air SPV Bhd’s 2019-2025 Islamic medium-term notes, which saw RM345mil changing hands in the range of 3.718%-4.207%.
2022-2047 DanaInfra Nasional Bhd tranches traded between 3.993% and 5.061% on the back of RM210.1mil. Next, Perbadanan Tabung Pendidikan Tinggi Nasional’s 2022-2026 notes eased to the range of 4.039%-4.340% with RM120mil traded.
On the AA-rated front, flows were concentrated on the energy sector, with the 2023-2038 Endra Energy Sdn Bhd tranches trading the most with a volume of RM230mil and a range from 5.300% to 6.238%. Moreover, YTL Power Bhd ‘05/27 papers closed at 4.848% with RM180mil changing hands.