BONDS were the preferred means for raising funds last year with the debt market accounting for RM55.7bil or over 80% of gross funds raised in the capital markets.
Bank Negara said the low interest rate environment and ample liquidity situation encouraged companies to issue private debt securities (PDS) at a competitive cost. Gross issuance of PDS amounted to RM36.2bil.
Reflecting the increasing popularity of Islamic instruments, the issuance of Islamic bonds exceeded conventional bonds for the first time in 2002.
Bank Negara said, however, both the bond and equity markets continued to be significant sources of finance. Net funds raised by both the private and public sectors amounted to RM23.9bil.
The equity market accounted for RM13.3bil while the net amount raised in the bond markets amounted to RM10.6bil, after accounting for redemptions.
According to the bank, significantly higher redemptions, arising from major corporate debt restructuring exercises, resulted in the lower net funds raised.
Bank Negara said the net funds raised by the public sector declined to RM8.6bil as a significant portion of the financing needs of the government was met from drawdown of accumulated assets.
The private sector, meanwhile, raised RM15.3bil from the capital markets with 87% coming from the equity market.
Bank Negara said improved economic activities saw higher trading volumes in equity, bond and foreign exchange markets.
Trading volumes were also higher in the exchange-traded derivatives market while in the money markets, the ample liquidity situation in the banking sector reduced demand for funds sourced through the inter-bank market.
Bank Negara said that in the derivatives market, trading activity was higher for Crude Palm Oil (CPO) futures on the back of higher CPO prices. There was also active trading of KLIBOR futures, it said.
According to the bank, the KLSE continued to offer a broad spread of investment opportunities with a larger number of sizeable initial public offerings, particularly in the telecommunications and infrastructure sectors, last year.
The market capitalisation of the KLSE grew to RM481.6bil.