Fixed Income Daily Pulse, 22 April 2015

The day’s trade recap (from our trading desk):

·         A generally bullish day for local govvies on the back foreign buying flows, with locals joining in the buying. Traded volume on benchmarks were at a week high with focus on the belly of the MGS curve with the MGS ‘09/22 saw RM740m changed hands. GII volume improved as well although still lagging the MGS rally. Overall, local govvies market seemed to have shaken the doom and gloom mentality for the past 2 weeks and seems to be looking to break past current resistance levels. Over the GG/AAA segment, a slew of Pengurusan Air SPV bonds maturing at 2017-2021 traded mixed at a range of 3.70%-4.06%, with RM60m changed hands. Meanwhile, Danga Capital ‘01/30 was bidded lower 2 bps to trade at 4.65%, with trading volume of RM25m.  Elsewhere in the AA segment, notable trade is Anih Berhad ‘11/26 and ‘11/27 which saw the yields declined 3 and 1 bps to 4.84% and 4.90% respectively.    MGS Benchmark Issues MGS Closing Level (%) Chg (bp) Vol (RM m) 3-yr 3.345 0.5 77 5-yr 3.615 -1.5 688 7-yr 3.750 -3.0 740 10-yr 3.855 -0.5 221 15-yr 4.045 -1.5 68 20-yr 4.180 -2.0 0 30-yr 4.560 -1.0 0 IRS Closing Rates IRS Closing Yld (%) Chg 1-yr 3.620 -2.0 3-yr 3.655 -1.0 5-yr 3.785 -2.5 7-yr 3.950 -2.5 10-yr 4.115 -2.3

               

  

Local News:

·           Malaysia’s inflation rate rose 0.9% in March 2015, which is same as the consensus. Prices of food and non-alcoholic beverages grew 2.3% y/y in February and utility costs increased by 1.9%. At the same time, transport costs dropped 4.9% and footwear prices dipped by 0.2%.

•     The international reserves of Bank Negara Malaysia amounted to US$105.6 billion as at 15 April 2015. The reserves position is sufficient to finance 8.2 months of retained imports and is 1.1 times the short-term external debt..