Tuesday, February 14, 2017

· Solid demand. Today’s 7.5y GII 8/24 auction drew a strong bid/cover of 3.123x on an


Results: GII 8/24 New Issue
·         Solid demand. Today’s 7.5y GII 8/24 auction drew a strong bid/cover of 3.123x on an expected MYR4b size. Demand was solid with keen participation from local Islamic real money accounts. GII auctions are usually local driven therefore this GII tender doesn’t seem to be affected much by the recent pressure on the Ringgit. We believe there should also be good amount of participation from local fast money given the appeal of GII 8/24 as the new 7y GII benchmark, probably one of the most liquid part of the GII curve.
·         WI was quoted wide at 4.095/03 early in the morning but then tightened gradually to around 4.05/045 before the auction. Successful yields averaged 4.045% and cut-off yield was reasonably tight at 4.05%. Post auction, yield on GII 8/24 grinded lower by another 1-2bps possibly due to short covering.
·         Next auction is the reopening of 30y MGS 3/46. We estimate a size of MYR3b.

Bid to cover:            3.123
Highest yield:           4.050%
Average yield:         4.045%
Lowest yield:           4.030%
Cut off:                   100%

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