· Healthy demand. Today’s 7y MGS 9/24 auction drew a bid/cover of 2.064x on an

Results: MGS 9/24 New Issue

·         Healthy demand. Today’s 7y MGS 9/24 auction drew a bid/cover of 2.064x on an expected MYR4b size (MYR3b auction + MYR1b private placement). The demand level is considered healthy and better than the average bid/cover of 1.75x in the previous three 7y MGS auctions in 2016. Weak sentiment, however, had somewhat weighed on the curve and with new supply the 7y10y sector had experienced a relative cheapening of 3-4bps WoW.

·         Successful yields averaged 4.059% which is within the pre-auction WI range of 4.06/4.04 and the cut-off yield was 4.072%. MGS 9/24 replaces the existing MGS 8/23 as the new 7y MGS benchmark but the new bond has a relatively small free float more so with MYR1b being privately placed.

·         Next auction is the new issue of 20y MGS 4/37. We estimate a size of MYR3b.

Bid to cover:            2.064

Highest yield:           4.072%

Average yield:         4.059%

Lowest yield:           4.030%

Cut off:                   64%