Corporate bond issuance in March surges to RM13b

PETALING JAYA: RAM Ratings said corporate bond issuance nearly doubled to RM13.1 billion in March from RM6.9 billion in February, but it cautioned that the future issuance amount could moderate as local bond yields are likely to face upward pressure in tandem with higher global yields.

The rating agency said in a statement that much of the upturn was attributed to the private sector (particularly banking entities), which added RM7.9 billion to gross issuance.

This also lifted the year-onyear issuance by 7.3% to RM29.6 billion for the first quarter of 2018 against RM27.6 billion recorded in the same quarter a year ago.

RAM Ratings also noted that foreign holdings of Malaysian bonds recorded a net inflow of RM2.9 billion, the bulk of which (around 72.2% of total inflows) constituted shorter-term papers.

However, with a large share of foreign bond flows so far this year attributed to holdings in short-term papers, it said global uncertainties and developments may lead to continued fluctuations in foreign bond holdings down the line.

The resilience of the ringgit in March also helped to attract investors, according to RAM Ratings.

“The ringgit continued to appreciate in April, strengthening to below RM3.88 against the US dollar in the first two weeks, as the dip in tech stocks and concerns over an increased likelihood of a USChina trade war grew, putting downward pressure on the US dollar.

“As the situation is still developing, capital markets and the US dollar in particular are expected to remain volatile as new information comes to the fore.”

Speaking of the impact of the 14th General Election, it opined that the run-up to the polls are not expected to disrupt the bond market to a great extent, as demonstrated in the past.