BPA Malaysia Weekly Bond Market Report

The Thomson Reuters BPAM All Bond Index gained 0.124 per cent over the week to close at 161.238 points as investors focus on the domestic and US monetary policy meeting, as well as the US midterm election.

However, the Malaysian ringgit weakened to 4.1775 against the greenback from 4.1665 last week.

On November 6, 2018, Republican Party retook the House of Representatives while Democratic Party managed to keep the Senate under its belt in the US midterm election that was closely watched by market players and political observers.

Bank Negara Malaysia (BNM) kept its benchmark Overnight Policy Rate (OPR) at 3.25 per cent at its Monetary Policy Committee (MPC) meeting on Thursday citing downside risks to growth stemming from any further escalation in trade tensions and prolonged weakness in the mining and agriculture sectors while expecting inflation to pick up pace in 2019.

BNM believes at the current level of the OPR, the degree of monetary accommodativeness is consistent with the intended policy stance.

The US Federal Reserve (US Fed) decided to maintain the benchmark federal fund rate at its current level of two to 2.25 per cent at its penultimate Federal Open Market Committee (FOMC) meeting on Thursday citing low unemployment rate despite moderating business fixed investment.

That said, US Fed is widely expected to increase the benchmark interest rate by 25bps in the final FOMC of the year in December.

Top 10 most active bonds:

The turnover in the top 10 most active bonds halved to RM4.8 billion from RM10.2 billion last week in this holiday-shortened week.

READ  Cultivating an ecosystem for start ups

The off-the-run MGS paper maturing on March 31, 2020 topped the list with RM752 million transacted.

New issuance(s):

On November 7, 2018, Bank Islam Malaysia Bhd issued a RM300 million 10-non-call-5-year subordinated sukuk with a profit rate of 5.15 per cent.

The issue is rated A1 with stable outlook by RAM Ratings.

On November 7, 2018, RAM Ratings has lifted the positive Rating Watch on the AA2 rating of UMW Holdings Bhd’s (UMW or the Group) RM2 billion Islamic MTN Programme (2013/2028), as well as the A1 rating of its RM2 billion Perpetual Sukuk Programme.

This is premised on the group’s decision not to pursue the proposed acquisition of a controlling stake in Perusahaan Otomobil Kedua Sdn Bhd and MBM Resources Bhd; the acquisition offers lapsed on October 31, 2018.

UMW’s ratings were put on Rating Watch with a positive outlook on March 21, 2018, as the proposed acquisitions could strengthen the group’s business and financial profiles.