· Bullish tone. Today’s 10.5y MGS 11/27 auction drew a robust bid/cover of 3.340

Results: MGS 11/27 New Issue

·         Bullish tone. Today’s 10.5y MGS 11/27 auction drew a robust bid/cover of 3.340x, the second highest YTD, on an expected size of MYR4.0b (MYR3.0b auction + MYR1.0b private placement). In addition to its new benchmark status (replacing MGS 11/26) underpinning demand, the strength in MYR and BNM’s stay of accommodative monetary stance reinforced a bullish-bias sentiment in the domestic bond market.

·         There was no concession as successful yields averaged 3.899%, at the lower end of the pre-auction WI of 3.95/89% and was tighter than the outgoing MGS 11/26 benchmark which was done at 3.94%. The high and low yields printed at 3.91% and 3.88% respectively. Post auction, yield on the new bond was taken to a low of 3.84/83% area probably due to buying from bids that missed in the auction and some short covering.

·         Next auction is the reopening of 7y GII 8/24 slated before month-end. We estimate the size to be MYR3.5b.

Bid to cover:            3.340

Highest yield:           3.910%

Average yield:         3.899%

Lowest yield:           3.880%

Cut off:                   95%