KUALA LUMPUR, Jan 20 — Malaysia’s gross corporate bond issuance hit a record of RM132.8 billion in 2019, attributable to the robust private sector, albeit largely boosted by a one-off RM27.6 billion issuance by Urusharta Jamaah Sdn Bhd (UJSB).
RAM Rating Services Bhd (RAM Ratings) in a statement today said the 2019 issuance had surpassed 2017’s record of RM124.9 billion and exceeded RAM’s projection of RM110 billion-RM120 billion.
“Discounting the extraordinary issue from UJSB, private sector issuance summed up to RM75.5 billion in 2019 — higher than the last five years’ average of RM64.4 billion.
“The robust private sector overshadowed the quieter quasi-government segment, the issuance value of which diminished to RM29.8 billion from RM39.2 billion in 2018,” said head of research Kristina Fong.
She added that in the government segment, Malaysia Government Securities (MGS)/Government Investment Issue (GII) issuance came up to RM115.7 billion, in line with RAM’s forecast of RM110 billion-RM120 billion.
Notably, foreign participation in the Malaysian bond market heightened considerably last year, with an impressive net foreign inflow of RM19.9 billion — the largest inflow since 2012, RAM Ratings said.
“The overarching theme last year was the sharp dovish turn by global central banks, especially by the United States (US) Federal Reserve, which ignited a focused hunt for yields by investors.
“While worldwide uncertainties had somewhat suppressed foreign buying activities, and the threat of Malaysia’s exclusion from the FTSE-Russell global index had triggered a marked outflow last April and May, overall demand remained positive,” it said.
Moving forward, RAM Ratings envisage gross corporate bond issuance to clock in at RM100 billion-RM110 billion in 2020, based on the pipeline of existing and potential funding.
“Given relatively accommodative interest rates, the momentum of corporate bond financing is anticipated to remain steady this year, anchored by the financial services sector and ongoing infrastructure financing needs.
“MGS/GII issuance is projected to amount to RM115 billion-RM125 billion in 2020, taking into account the government’s deficit financing requirements and the refinancing of debts maturing next year,” she said.
RAM Ratings also expects foreign interest to ease, given the pause in the US’ rate-cut cycle, along with the possibility of a 25 basis points cut in Bank Negara Malaysia’s overnight policy rate by end-2020. — Bernama
