The RM2.0 billion 30-year MGS (MGS Mar’46) reopening auction (alongside RM1.0 billion private placement) saw firm demand with a bid-to-cover ratio of 2.562 times. Meanwhile, average yield was 4.676%, within a narrow spread of 4.660-4.6

30-year MGS auction

• The RM2.0 billion 30-year MGS (MGS Mar’46) reopening auction (alongside RM1.0 billion private placement) saw firm demand with a bid-to-cover ratio of 2.562 times. Meanwhile, average yield was 4.676%, within a narrow spread of 4.660-4.686%, and which was tighter than WI of 4.72/61% quoted late last week.
• The 30-year MGS has substantially tightened from peak of 4.90% earlier this year. However, if positive factors persist (such as doubts on Trump fiscal plans and delay in Fed hikes support further UST rally) technically it may still see upside with a 4.55% support level, in our view. On top of that, 10x30 spread appear to be relatively stable at 67bps, in contrast to median spread of 63bps since Dec 2016.