· The new issuance of the 10.5-year MGS maturing 16 May 2027 with a size of RM3.0bil

Dear Readers, Highlights of the report as follow:-

·      The new issuance of the 10.5-year MGS maturing 16 May 2027 with a size of RM3.0bil recorded a strong book-to-cover (BTC) ratio of 3.340 times. This was the highest BTC ratio in the past 6 years. ·         We find the current spread of the 10-year MGS/10-year UST of 161 basis points to be slightly higher compared to the average 10-year MGS/10-year MGII spread of 160 basis from 2011 to 2017. However, as of May 15th, the spread has narrowed by 12 bps since the start of the month as demand for Malaysian sovereign bonds has been underpinned by the stronger ringgit and higher US Treasury yields on the back of expectations of a US Fed rate hike in June. ·         The next tender to watch is the re-opening of the 7-year MGII in May 2017. It will be the third re-opening of MGII for 2017. The last issuance of such papers was the 7-year MGII ‘07/23 in April 2016 which reported a 2.686 times BTC ratio.