Results: MGS 11/26 New Issue

Results: MGS 11/26 New Issue

·         Decent demand. The widely anticipated 10.5y MGS 11/26 new issue garnered a decent bid/cover of 2.193x on an expected MYR4b size. Despite an uncertain external backdrop, bids for this new issue was reasonably keen with good interest from both domestic real and fast money accounts partly attributed to its new benchmark status. Successful yields averaged 3.90%, more or less within the pre-auction WI range of 3.90/89 while the highest yield was 3.91%.

·         We guided for “a quarter of two halves” in our last quarterly outlook report. While market sentiment has noticeably turned more cautious and this is especially true for the USDMYR which has risen from a low of 3.90 in early-May to 4.07/08 as we write, the MGS curve has thus far showed relative resilience and holding up surprisingly well, seemingly little moved by the weak Ringgit.

·         Next auction will see the new issue of another new MGS benchmark, i.e. the 5.5y MGS 11/21 which we estimate a size of MYR4b.

Bid to cover:            2.193

Highest yield:           3.910%

Average yield:         3.900%

Lowest yield:           3.878%

     Cut off:                    16%