CREDIT ANALYSIS REPORT

Monthly Bond Market and Rating Snapshot - July 2022 - Full Report

Report ID 6053890046875 Popularity 1315 views 24 downloads 
Report Date Aug 2022 Product  
Company / Issuer Fixed Income Bond Market Update Sector Bond Market Update - Bond Market Update
Price (RM)
Normal: RM300.00        
  Add to Cart
Rationale
Malaysian Government Bond Market          

The total amount of MGS/GII outstanding shrank in July to RM958.8 billion (June: RM962.3 billion) due to a higher volume of redemption valued at RM19.0 billion (June: none). However, the gross issuance of MGS/GII came marginally higher at RM15.5 billion (June: RM15.0 billion). The increase was driven by the stronger GII issuance valued at RM10.5 billion (June: RM4.5 billion). This is notwithstanding the lower issuance in the MGS segment valued at RM5.0 billion (June: RM10.5 billion). Public offerings of MGS/GII in July were all met with solid bidding interest, with BTC ratios exceeding 2.0x. Three public offerings raised a total of RM10.5 billion while the remaining RM5.0 billion was raised through private placements. The average BTC ratio YTD stood at 2.4x, a tad higher than the 2.3x recorded for the July 2021 to July 2022 period, reflecting robust demand from domestic institutional investors despite higher issuances.

Malaysian Corporate Bond Market         

Corporate bond issuance slowed to RM9.0 billion in July after rising to RM13.7 billion in June. Fundraising activities in the unrated corporate bond segment remained relatively quiet at RM0.6 billion (June: RM1.4 billion). Rated corporate bond (Cagamas Berhad included) issuance dropped to RM7.9 billion (June: RM12.3 billion). The only segment that registered gains on issuance is the quasi-government segment, which raised RM0.5 billion (June: zero issuance). YTD corporate debt issuance came in at RM61.5 billion, representing a decline of 6.2% from RM65.5 billion recorded in the corresponding period last year. The decrease was primarily dragged down by relatively muted issuances in the quasi-government segment, which almost halved to RM7.2 billion compared with the RM15.2 billion recorded in the same period last year.

Foreign Holdings of Local Bonds          

Foreign holdings of local bonds recorded another month of outflows amid higher redemption of MGS/GII valued at RM19.0 billion and a narrowing yield differential with the US. In July, the local bond market logged foreign outflows of RM3.5 billion, albeit smaller than the previous month (June: -RM4.1 billion). Total foreign holdings continued on a downtrend at 13.7% in July (June: 14%). The share of foreign holdings in MGS dropped significantly to 35.5% in July (June: 36.5%) following the net foreign outflows. Additionally, the share of foreign holdings was also diluted in other segments of local government bonds. For the first seven months of 2022, the cumulative foreign flows in the local bond market continued to be in negative territory at a larger scale of RM6.8 billion (Jan-Jul 2021: +RM20.8 billion).  
Related