Budget 2017 displays a similar policy tone on fiscal discipline with a target to trim deficit/GDP ratio to 3.0% in 2017 while reiter

Budget 2017: Fixed Income View

·         Budget 2017 displays a similar policy tone on fiscal discipline with a target to trim deficit/GDP ratio to 3.0% in 2017 while reiterating the 3.1% target in 2016.

·         Our forecast on government bond supply in 2016 is lowered marginally to MYR86.5b from MYR87b; no change to our 2017 forecast at MYR104b.

·         Overall, the government’s commitment to fiscal consolidation should provide some resilience to the sovereign rating of Malaysia, but with limited visibility to rating upside in the near term, in our view.