· Strong bid. Today’s 20y GII 10/35 auction drew a high bid/cover of 2.89x on an

Results: GII 10/35 Reopening

·         Strong bid. Today’s 20y GII 10/35 auction drew a high bid/cover of 2.89x on an expected MYR2b size. Strong demand in this auction is well within market expectation as the auction size is small and this 20y point still offers relative value along the GII curve with 13-15bps yield pickup over MGS. Further, the OPEC deal in production cut boosted Ringgit and helped lift the auction sentiment.

·         Foreign participation. WI started wide at 4.30/22 early in the morning, but then tightened pretty much all the way to auction close at some point to a low of 4.235/230. Not only that, auction results turned out to be even tighter as successful yields averaged a tight 4.226% and cut-off yield was capped at 4.238%. Usually offshore bid as we understood was rare in GII tenders but was noted in this auction.

·         Next auction is the new issue of 3.5y GII 4/20. We estimate a size of MYR4b.

Bid to cover:            2.890x

Highest yield:           4.238%

Average yield:         4.226%

Lowest yield:           4.210%

Cut off:                   40%

MGS and GII auction results/supply pipeline 2016