KUALA LUMPUR: Foreign demand for Malaysian bonds stayed sturdy in October, with the domestic bond market charting its sixth consecutive month of net foreign inflows at RM8bil, RAM Ratings said.
In a statement issued on Tuesday, the rating agency said the foreign inflow was a vast improvement from marginal net inflows of RM500mil in September as uncertainties over the FTSE Russell watchlist decision kept most investors on the sidelines.
With the uncertainties out of the way, the MGS/GII issuance in October continued to be robust at RM14.5bil with healthy bids-to-cover of close to two times or more.
RAM was positive on the outlook for Asia as it expected the region would remain attractive in coming months amid economic recovery prospects, especially in trade performance.
“Moreover, expectations of what a (Joe) Biden win in the US could mean for many export-oriented Asian economies buoyed the optimism, ” it said.
As for Malaysia, it expected the pipeline of MGS/GII next year will continue to be boosted by the funding needs for Budget 2021.
“As such, we expect government bonds to remain elevated, possibly at the higher end of our projected RM155bil to RM165bil next year.
“Meanwhile, corporate bonds issuance in October surged to RM16.2bil, bringing the year-to-date amount to RM79.4bil, ” it said.
RAM said given the low cost of funding and as issuers look to lock in their financing by year end, it is well within sight of achieving the higher end of its projected range of RM80bil-RM95bil for the year.
Hence, taking into account the prospects of economic recovery, low interest rates as well as the continuation of big-ticket infrastructure projects, RAM revised its earlier gross corporate bond issuance to RM100bil-RM110bil in 2021.
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