KUALA LUMPUR, July 17 — Malaysia’s 10-year bonds climbed, pushing the yield to an eight-month low, on speculation the nation’s relatively high returns will attract demand.

The yield on the 4.181 per cent notes due July 2024 declined two basis points, or 0.02 percentage point, to 3.94 per cent as of 11:09am in Kuala Lumpur, data compiled by Bloomberg show. The rate fell 10 basis points this month and is the lowest for benchmark paper of that tenor since November.

The Malaysian 10-year yield compares with 2.52 per cent for similar-maturity US Treasuries and 1.19 per cent for German bunds. Overseas holdings of debt from the Southeast Asian nation reached a record in May as political turmoil in Thailand and Indonesia’s impending election reduced the attractiveness of those countries’ bonds, Maybank Investment Bank Bhd. said.

“Malaysia’s 10-year yield still offers a good pickup,” said Winson Phoon, a Kuala Lumpur-based fixed-income analyst at Maybank. “On a regional basis, Malaysia is still better-positioned. Politically we look more stable.”

Global funds raised holdings of Malaysian government and corporate debt by 5.7 per cent to RM249 billion (US$78 billion) in May from April, the latest central bank data show.

The ringgit rose 0.1 per cent to 3.1845 per dollar in Kuala Lumpur, according to data compiled by Bloomberg. The currency has advanced 0.8 per cent in July and 2.9 per cent this year.

The central bank increased the policy rate by 25 basis points to 3.25 per cent on July 10 and said in an accompanying statement that inflation would probably remain above its long-run average. In contrast, Federal Reserve Chair Janet Yellen told lawmakers July 15 that US interest rates are likely to stay low for a “considerable period” after the central bank ends its asset-purchase program.

One-month implied volatility in the ringgit, a measure of expected moves in the exchange rate used to price options, was little changed at 5.19 per cent. — Bloomberg