· Lacklustre demand. Today’s 10y MGS 11/27 auction showed a slightly sluggish tone

Results: MGS 11/27 Reopening

·         Lacklustre demand. Today’s 10y MGS 11/27 auction showed a slightly sluggish tone with 1.68x bid/cover on an expected MYR4b total size (MYR3b auction + MYR1b private placement). Broad-based strength in regional currencies this morning and lower UST yields overnight failed to generate biddish sentiment.

·         Successful yields averaged 3.978% and the highest yield cut at 3.989%, slightly north of the pre-auction WI of around 3.98/96.  We think market’s sluggish interest in MGS 11/27 is partly because of it being a richer point along the curve. Although 10y MGS has cheapened a tad into the auction, the current 7y10y spread of ~8bps is still inside the 1-year mean of 13bps and 5-year mean of 11bps.

·         Next auction is the reopening of 20y GII 8/37. We estimate a total size of MYR3b.

Bid to cover:            1.683

Highest yield:           3.989%

Average yield:         3.978%

Lowest yield:           3.957%

Cut off:                   6%