KUALA LUMPUR: Malaysian Rating Corp Bhd (MARC) expects Malaysia’s corporate bond and sukuk issuances for this year to hover in the range of RM90bil to RM100bil.
Group chief executive officer Datuk Jamaludin Nasir said the rating agency expected the bond and sukuk capital market to be challenging this year after achieving an issuance totalling RM120bil last year.
“Among these challenges include the economic conditions and global trends that can significantly impact capital markets,” he told reporters at the Lead Managers League Tables award ceremony here yesterday.
He said the uncertainty regarding economic growth, inflation rates and geopolitical factors might also create volatility and affect investor sentiment.
“Changes in regulations also have a profound impact on capital markets,” he said.
He said the upcoming regulatory reforms or shifts in policies might also introduce new compliance requirements and alter the operating landscape for market participants.
Jamaludin said the rapid advancements in technology such as artificial intelligence, blockchain and digital currencies could disrupt traditional financial systems and market structures.
Therefore, he said adapting to these technological changes and leveraging them for efficiency and innovation would be essential. However, Jamaludin said the corporate bond issuance is expected to continue as typically most of the issuance are project based.
“Although we have a bit of lag for the first five months of the year, we hope that this will pick up in the second half of this year based on the issuance applications in the pipeline.
“In comparison to the regional market, Malaysia’s bond market has always been the more advanced and obviously a lot more competitive, whereby project sponsors will be able to achieve long-term financing projects from our market,” he said.
On the impact of the rise in overnight policy rates, Jamaludin said MARC expected that there would be some pushback by some clients and there would be a lot of pressure on project-based issuance as it would increase the issuance cost.
He said historically, 75% of the investors in the Malaysian bond and sukuk market are largely locals with the balance being foreign investors.
“It was also observed that the rising rates by the Federal Reserve have affected the capital. What we are seeing right now is that quite a number of the foreign investors are moving into fixed income and we are seeing slight growth in the market,” he said. — Bernama
