We are pleased to inform you that we have published a report entitled “Monthly Bond Market and Rating Snapshot for September 2018” on our website which can be accessed via the link below:
SUMMARY AND COMMENTS:
Local govvies: primary market support despite headwinds
There was local institutional support for govvies in the primary market in September even as net foreign selling of local bonds continued for the second consecutive month. A reflection of strong interest, the bid-to-cover (BTC) ratios for the 30-year reopening of Government Investment Issue (GII), the 10-year reopening Malaysian Government Securities (MGS) and the 3.5-year new issue of GII all came in higher at 1.9x, 2.7x and 2.2x, respectively. Lower-than-expected August Consumer Price Index (CPI) data and the higher appetite for Emerging Market (EM) assets during the last week of the month contributed to the demand.
Net foreign outflows from the local bond market in September was higher at RM3.0 billion, compared with August’s RM2.4 billion. Due to the large amount of maturing MGS of about RM11.9 billion, foreign holdings of MGS fell significantly by RM5.6 billion to RM148.3 billion. Corporate bonds also saw net foreign outflows. Meanwhile, GII and Malaysian Treasury Bills (MTB) registered net foreign inflows. Total foreign net outflows in the first nine months of 2018 came in at RM22.2 billion, compared with RM15.5 billion in the same period last year.
With investor perceptions of rising uncertainty over Malaysia’s fiscal direction and economic outlook, corporate bond issuances fell 9.2% year-on-year in the January-September period to RM75.7 billion. Gross issuance in September totalled RM7.2 billion, lower than August’s RM7.6 billion. Not surprisingly, issuances of government-guaranteed (GG) corporate bonds fell the most. Going forward, we expect corporate bond issuance activity to moderate further on the back of rising global interest rate environment.
As a result of the tit-for-tat tariffs in the ongoing US-China trade war and the hawkish stance of the US Federal Reserve, the ringgit continued to fall in September, in line with its regional peers. It has remained on a downtrend against the US dollar (USD) since March 2018 when it traded at RM3.8635. By end-September, the ringgit was traded lower at RM4.1383. Moving forward, we expect the recent release of positive US economic data and the still unresolved US-China trade dispute to heap further pressure on the ringgit.
We trust you will find this report informative.
Malaysian Rating Corporation Berhad (364803-V)
19-07, Level 19, Q Sentral, 2A Jalan Stesen Sentral 2
Kuala Lumpur Sentral, 50470 Kuala Lumpur
Tel : +603 2717 2900 | Fax : +603 2717 2910
The information contained in this email and/or any attachment hereto is strictly confidential and privileged. If you are not the intended recipient, and/or have received this email in error, you must not copy, disseminate or disclose the contents of this message and/or any attachment to any other person. Please notify the sender and delete this message and any attachment from your system. Malaysian Rating Corporation Berhad (“MARC”) accepts no liability in respect of prohibited and unauthorised use by an unintended addressee or recipient. Any opinion, view or other information in this message and/or any attachment hereto which does not relate to the official business of MARC is that of the individual sender. Although this email and/or any attachment is believed to be free of any virus or other defect which may affect any computer system into which it is received and opened, it is the responsibility of the recipient to ensure that it is virus-free and MARC accepts no responsibility for any loss or damage arising in any way from the use thereof.