Highlights

The first half of the year was dominated by the news of Fed’s monetary policy stand. A few Fed members believed that investors have overreacted to comments by Bernanke about the quantitative easing. For instance, Minneapolis Fed President Narayana Kocherlakota claimed that Bernanke’s comments were not as hawkish as is being portrayed in the markets, while others attempted to reassure the markets that the Fed will remain very accommodative. Market players with the ability to withstand mark-to-market disciplines and the rise in volatility should look through the noise and focus on the underlying fundamentals, as the bond yields are attractive at the moment (UST hovering around 2.50%).

Last week, the local govvies market closed weaker with selling pressure eased at the end of week, whereby support came from the local and foreign players. Furthermore, the U.S 1Q GDP growth numbers were revised down from 2.4% to 1.8%, and toned-down the market perception on QE tapering. Meanwhile, Bank Negara has announced late last Friday that the broad money (May 2013) was up by 9.5% yoy. This further endorsed that Malaysia’s market is still flush with liquidity and fundamentally strong despite the recent volatility in the global markets.

The re-opening RM4 billion 7-year GII (05/20), which is the 7-year GII benchmark, has attracted a reasonable demand (1.898 times book-to-cover) with the average yield at 3.745%.  

Market data watch for this week:- Australia Interest Rate Decision on 02 Jul 2013; U.K. and ECB Interest Rate Decision on 04 Jul 2013; and U.S. Unemployment Rate and Nonfarm Payrolls on 05 Jul 2013.

Fixed Income Securities

On the govvies market, MGS papers were traded mixed, and the most active traded securities were GII 05/20 (7-year GII benchmark), MGS 07/16, MGS 09/16 and MGS 08/22, with trading volume of RM2.72 billion (including WI), RM1.79 billion, RM1.37 billion and RM1.23 billion; and yield closed at 3.73% (+24 bps), 3.27% (+5), 3.39% (+11) and 3.71% (+10 bps), respectively.

On the local PDS (including quasi-) market, trading activites have further picked up with total trading volume amounted to RM4.17 billion vs RM4.0 billion the week before, and the actively traded securities were Noble 12/14 (4.01%), ABD 02/17 (3.49%), PLUS 01/30 (4.45%) and Telekom 12/22 4.00%), with a trading volume of RM170 million, RM135 million, RM115.3 million and RM110 million, respectively.

Efinite Structure Sdn Bhd, wholly owned by Johor Corporation, has issued RM184 mil asset-backed Sukuk Ijarah (Not Rated), with profit rate of 6-mth Cost of Funds + 2.25% and tenor of 3-10 years, on 28 Jun 2013. (FAST)

Telekom Malaysia Bhd has issued additional RM250 million Sukuk (AAA), with coupon rate of 3.93% and tenor of 10 years, from its RM2 billion ICP / IMTN Programme on 24 Jun 2013. (FAST)

Konsortium ProHAWK Sdn Bhd has issued RM200 million Sukuk (AA2), with coupon rate of 5.24% - 5.35% and tenor of 17.5 - 20 years, from its RM900 million Sukuk Murabahah Programme on 28 Jun 2013.  (FAST)

KDU University College Sdn Bhd, wholly owned by Paramount Corporation Bhd, has issued RM39 million assetbacked Sukuk (Not Rated), with floating coupon rate and tenor of 7 years, from its RM350 million Sukuk Programme on 28 Jun 2013.  (FAST)

Cagamas Bhd has issued additional RM150 million MTN (AAA), with coupon rate of 3.30% - 3.40% and tenor of 1 - 2 years, from its RM20 billion MTN Programme on 27 Jun 2013. (FAST)

Sports Toto Malaysia Sdn Bhd has issued additional RM150 million MTN (AA-), with coupon rate of 3.73% and tenor of 1 year, from its RM800 million MTN Programme on 28 Jun 2013. (FAST)

Sabah Credit Corporation has issued additional RM50 million MTN (AA1), with coupon rate of 3.60% and tenor of 2 years, from its RM1 billion ICP / IMTN Programme on 26 Jun 2013. (FAST)

Segi Astana Sdn Bhd has issued additional RM20 million MTN (AAA(fg)), with coupon rate of 4.20% and tenor of 4 years, from its RM470 million ICP / IMTN Programme on 26 Jun 2013. (FAST)

NU Sentral Sdn Bhd has issued additional RM55 million Sukuk (Not Rated), with coupon rate of 5.00% and tenor of 5 years, from its RM600 million MTN Programme on 28 Jun 2013. (FAST)

On 28 June 2013 Tanjung Langsat Port Sdn Bhd had fully redeemed the RM250.0 Million Sukuk Musyarakah Bond and RM135.0 Million Musyarakah CP/ MTN Programme before the original maturity date i.e. 15 May 2020 and 15 May 2015 respectively. (FAST)

PECD Bhd has failed to remit the principal plus interest on its RM200 mil outstanding fixed rate bond. (FAST)RAM Ratings opines that the delay in the completion of KLIA2 (i.e. the new low-cost carrier terminal (“LCCT”))will have no impact on Malaysia Airports Holdings Berhad’s AAA credit profile. (RAM)  

RAM Ratings cautious on India’s fiscal strength in lead-up to elections. (RAM)

MARC has assigned a preliminary rating of AA+ to Kapar Energy Ventures Sdn Bhd's RM2.0 billion Sukuk Ijarah which will be mainly utilised to refinance the company existing BaIDS facility (outstanding amount of RM1.51billion). (RAM)

Source: Kenanga