· Strong bid, but lacklustre trading interest. Today’s 10y GII 7/27 auction drew a bid/cover of 2.541x on an expected MYR4b size (MYR3b auction + MYR1b private placement). While the supply is well absorbed, trading interest was notably absent with no WI was done. Foreign participation is believed to b

Results: GII 7/27 Reopening

·         Strong bid, but lacklustre trading interest. Today’s 10y GII 7/27 auction drew a bid/cover of 2.541x on an expected MYR4b size (MYR3b auction + MYR1b private placement). While the supply is well absorbed, trading interest was notably absent with no WI was done. Foreign participation is believed to be little or non-existent and domestic investors generally stay on the sidelines ahead of the US FOMC meeting outcome on 15 June (Asia time).

·         Successful yields averaged 4.013% and the highest yield cut at 4.021%, more or less within the pre-auction WI of around 4.02/99. On a YTD basis as of end-May, trade volumes of GII was down 44% from 2016 YTD and down 28% from 2015 YTD. Trading interest in MGS on the other hand held up better, with 2017 YTD volume as of end-May down only 8% and 23% from 2016 and 2015 respectively over the corresponding periods.

·         Next auction is the reopening of 7y MGS 9/24. We estimate an auction size of MYR4b.

Bid to cover:            2.541

Highest yield:           4.021%

Average yield:         4.013%

Lowest yield:           3.991%

Cut off:                   7%