Results:
GII 4/22 New Issue
·
Strong bids. A surprisingly strong show in
today’s 5y GII 4/22 auction drawing a bid/cover of 2.773x on an expected MYR4b
size. This is the highest bid/cover since Feb 2016 for auction in 3-5y
sector and a jump from 1.54x recorded by the 5y MGS auction back in March.
Understandably, GII tends to attract participation from wider domestic accounts
than the conventional MGS.
·
Local bond market
has been lacklustre MTD. Renewed risk aversion sentiment led by lower UST
yields to a certain degree encourages mild risk taking and this bond provides a
balance of yield and duration exposure. We think local banks account for
majority of the demand together with some interest from asset managers and
pension funds.
·
Next auction is
the reopening of 15y MGS 4/33 which will replace MGS 6/31 as the new benchmark.
We estimate a size of MYR3b.
Bid to
cover: 2.773
Highest yield:
3.957%
Average
yield: 3.948%
Lowest
yield: 3.925%
Cut
off:
29%
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