FW: FI Research -Re-opening of 10-year MGS

 

 

Dear Readers,   Highlights of the report as follow:-

·         The reopening of the 10-year MGS 06/28 with a size of RM3.5bil, recorded a strong bid-to-cover (BTC) ratio of 1.851 times. Average yield for this MGS is 4.202%, which sits within a relatively similar range to the previous 10-year MGS auction, between 4.178% and 4.215%. ·         The yield spread has narrowed from 33.1bps in the beginning of the year as the yields on the 10-year MGS has been catching up to the 10-year MGII, rising 4.2bps year-to-date while the 10-year MGII increased by 4.3bps. Over the same period, the standard deviation of the former is lower at 0.19 on comparison to the latter’s 0.21, indicating higher volatility experienced by the MGII bond yield. Meanwhile, the spread between 10-year MGS and UST yields has narrowed down to 114.2bps from a one year average of 146.9bps as the UST 10Y hit a 7-year high of 3.11% levels. The sell-off in the UST was largely due to a stronger economic outlook with higher inflation expectation. Adding to that are higher crude oil prices, which are expected to add inflationary pressure to the economy. ·         The next tender to watch is the new issuance of the 5.5-year GII 11/23 (Table 2). The last auction of such papers was the 5-year MGS 04/22 in January 2018 which reported a 2.581 times BTC ratio.

 

 

Best regards,

Fixed Income Research & Strategy

AmBank Research, AmBank (M) Berhad

+603 2036 2292 (DL) +03 2031 7218 (Fax)

Level 15, Bangunan AmBank Group, 55 Jalan Raja Chulan, 50200 Kuala Lumpur

 

 

 

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