Strong bid. Today’s 30y MGS 3/46 auction garnered a sold bid/cover of 2.562x on an expected MYR3b total supply (MYR2b auction + M

Results: MGS 3/46 Reopening

·         Strong bid. Today’s 30y MGS 3/46 auction garnered a sold bid/cover of 2.562x on an expected MYR3b total supply (MYR2b auction + MYR1b private placement). Market is slowly regaining confidence to extend duration as the MGS curve flattened with good bids even in the ultra-long sector. Unlike previous several tenders that cheapened 5-10bps leading to the auction day, the MGS 3/46 was holding up well and strengthened alongside an improved market with real money accounts seen chasing the curve lower.

·         WI was quoted at around 4.69/66 in the morning and was held pretty much in that range to auction close. Successful yields cut off at a reasonably tight 4.686% and averaged 4.676%. To a certain extent, the auction results was partially helped by one third/MYR1b of the total supply being privately placed as this reduced the available size to market.

·         Next auction is the new issue of 5y MGS 3/22. We estimate a size of MYR4b.

Bid to cover:            2.562

Highest yield:           4.686%

Average yield:         4.676%

Lowest yield:           4.660%

Cut off:                   5%