MARC: Govt bond yields fall to multi-year lows

PETALING JAYA: Yields for Malaysian government securities (MGS) shed between 34 basis points (bps) to 58bps by the end of April, as yields along the belly till the long-end of the curve fell more sharply compared to shorter tenures.

According to a statement from Malaysian Rating Corporation Bhd (MARC), the 20 year /3 year MGS yield spread narrowed to 96bps, from 116 bps at the end of March. Both the 3 year and 10 year MGS settled at new multi-year lows of 2.42% and 2.87% respectively.

In tandem with MGS, yields on investment-grade corporate bonds also fell. AAA, AA and A-rated corporate bond yields fell by between 25bps and 61bps in contrast with March’s increase of between 36bps and 56bps.

“Yields on MGS ended April significantly lower mainly due to the heightened expectation of an overnight policy rate (OPR) cut by Bank Negara Malaysia (BNM) at its scheduled Monetary Policy Committee (MPC) meeting on May 5.

“ Demand for MGS was also supported by signs of falling Covid-19 infection rates in Malaysia which led to rising hopes of looser movement control order (MCO) restrictions in May,” MARC said.

Meanwhile, foreign selling pressure of local bonds eased in April, though foreign investors remained net sellers.

Net foreign outflows from the local bond market amounted to RM2 billion, bringing total foreign holdings to RM185.8 billion as at end-April, from RM187.8 billion at the end of March.

In terms of percentage share of total outstanding, foreign ownership came in at 12.1%.

Government investment issue (GII) accounted for most of the outflows (-RM1.9 billion). Foreign holdings of GII amounted to RM18.6 billion, equivalent to 5.3% of total outstanding GII.

source https://www.thesundaily.my/business/marc-govt-bond-yields-fall-to-multi-year-lows-CF2421631