Fixed Income Daily Pulse, 22 Oct 2015

Today’s trade recap by our trading desk:-

· Highlight today was the 7y auction (tap of 9/22 for MYR3.5bn) – pre auction WI trading witnessed selling at the open from 4.06% to 4.09%, 5bp cheaper from previous close at 4.04%. An auction result was slightly weaker than expected, the average printing at 4.081% on a cover of 1.67x. Price action was of better buying in 9/22 and 9/25 post auction, which bodes well for sentiment. We may see better selling intro strength as street looks to reduce longs ahead of the next auction at the end of the month (new 20y GII).

MGS Benchmark Issues MGS Closing Level (%) Chg (bp) Vol (RM m) 3-yr 3.615 -1.5 388 5-yr 3.700 -6.0 150 7-yr 4.075 +4.0 1547 10-yr 4.140 +0.5 221 15-yr 4.365 0.0 73 20-yr 4.470 0.0 0 30-yr 4.720 0.0 0 IRS Closing Rates IRS Closing Yld (%) Chg (bp) 1-yr 3.860 0.0 3-yr 4.020 1.5 5-yr 4.200 -1.0 7-yr 4.375 2.5 10-yr 4.610 6.0 Source: Bloomberg, AmBank          Source: BondStream, AmBank                      Local News: The international reserves of Bank Negara Malaysia amounted to US$94.1 billion as at 15 October 2015. The reserves position is sufficient to finance 8.8 months of retained imports and is 1.2 times the short-term external debt.