Fixed Income Daily Pulse, 23 July 2015

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

·        After seeing very active 2-way price action since the beginning of the week, the market was more subdued today, with yields largely unchanged on both the MGS & GII curve. Foreign players were mostly quiet today, as the buying flows seen from them over the past few days has stopped. The outperforming bond today was the 7-year GII with RM470 million traded while the 30-year MGS saw some decent buying interest as well with RM210 million traded; suspecting some real money buying flow behind these bonds. Other benchmarks on both MGS/GII curves were rather muted with not more than RM150 million traded on each of them. On the MGS curve, as the 7/10s is still flat and the 10/15s is steep, we still stick with our view that the 7-year MGS and 15-year MGS being attractive off the curve. 2023-2035 tranches of Danalnfra Nasional Berhad bonds traded at mixed between 1-5 bps to close at 4.18%-4.71% with a total trading volume of RM110 million. Meanwhile, Danga Capital Berhad ‘04/16 eased 1 bp to settle at 3.69% with RM45 million changed hands. In the AA segment, Sarawak Energy Berhad ‘01/22 eased 2 bps to settle lower at 4.47% with RM30 million done. Meanwhile, BGSM Management Sdn Berhad ‘12/15 and ‘12/22 decreased by 2-7 bps to settle at 3.99% and 4.83% with RM135 million traded. MGS Benchmark Issues MGS Closing Level (%) Chg (bp) Vol (RM m) 3-yr 3.175 0.0 50 5-yr 3.500 0.0 0 7-yr 3.810 0.0 89 10-yr 3.920 -0.5 82 15-yr 4.195 -1.0 0 20-yr 4.305 0.0 0 30-yr 4.665 -0.5 211 IRS Closing Rates IRS Closing Yld (%) Chg (bp) 1-yr 3.695 0.0 3-yr 3.750 0.0 5-yr 3.950 0.5 7-yr 4.125 0.0 10-yr 4.335 1.0 Source: Bloomberg, AmBank                      Source: BondStream, AmBank

               

  

Local News:

·             The international reserves of Bank Negara Malaysia amounted to US$100.5 billion as at 15 July 2015. The reserves position is sufficient to finance 7.9 months of retained imports and is 1.1 times the short-term external debt.