Malaysian Bond Market

The MGS yield curve steepened with the segment rising 0.5–14bps, tracking the global yields except for the 5- and 7-year which were muted at 2.150% and 2.460%. Earlier in the week, liquidity was razor thin in the absence of fresh flows but it was gradually propelled by buying interest due to month-end rebalancing inflows.

The sentiment improved after Budget 2021 was passed with additional details including further loan moratorium for the B40 and micro SMES, and the option for EPF members to withdraw up to RM10,000 each, amounting to an estimated total withdrawal of Rm70bil. Still, the focus of the week was on the 15-year ‘07/34 auction which garnered a soft BTC of 1.481x, hovering at threemonth low on the back of a total size amounting to Rm3bil with no private placement. The auction closed with a high/low of 3.500% and 3.348% while averaging at 3.432%. As at noon Friday, the 3-, 5-, 7-, 10-, 15-, 20- and 30-year benchmark MGS yields settled at 1.86%, 2.15%, 2.52%, 2.70%, 3.29%, 3.61% and 4.07%, respectively.

Activities in the govvies segment declined by 6% week on week to Rm13.7bil from last week’s Rm14.5bil. The MGS segment shrank by 19% to Rm8.8bil from Rm10.9bil in the previous week. The GII climbed 36% to Rm4.6bil from Rm3.4bil.

Meanwhile, the short-term bill’s (MTB/MITB) trading rose 30% weekon-week to Rm0.4bil from Rm0.3bil.

Secondary trade volume improved for the week in review, up 40% to Rm1.3bil from Rm0.9mil in the previous week. The credit spread narrowed by 19.6bps on average across the curve. The shorter end rose 24.8bps on average while both the belly and longer ends of the curve eased averagely by 50bps and 29bps, respectively.