Russell to decide on Malaysian bonds today

  • Markets
  • Thursday, 26 Sep 2019

Bank Negara has taken steps to address some of the issues raised

SINGAPORE: Malaysia’s 10-year government bonds have room to rally if liquidity-enhancing efforts from the country’s central bank mean the securities stay in a key global bond index.

FTSE Russell put Malaysia’s bonds on watch in April for potential exclusion from its World Government Bond Index, citing concerns about liquidity for the ringgit and the local bond market.

The ringgit weakened by more than 200 pips on the day of the announcement, while 10-year yields jumped 3 basis points (bps) – they went on to rise by a total of 12 bps in the week of the announcement. Since then, the central bank has taken steps to address some of the issues raised.

Sovereign 10-year bonds have come under pressure recently as a less-than-dovish Fed drove up global yields and last week’s lacklustre 7-year Malaysian government bond auction – which was also hurt by robust primary corporate issuance.

The FTSE Russell decision is due today, and 10-year notes could retrace some of their recent losses if Malaysia retains its place in the index. — Bloomberg

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