KUALA LUMPUR: Foreign holdings of Malaysian bonds rose to RM279.1 billion in July 2024 from RM271.3 billion in June 2024, the highest since November 2023, according to MIDF Amanah Investment Bank Bhd.

In its monthly fixed income review, the investment bank said the RM7.8 billion increase marked the steepest monthly rise in a year, bringing the cumulative foreign inflow into the Malaysian bond market for the first seven months of 2024 to RM8.7 billion.

"Foreign holdings soared to 22.1 per cent, or RM265.4 billion, of the total outstanding government bonds in July 2024. This is the highest in seven months but remains below the pre-pandemic level (2019 average: 23.1 per cent)," it said.

MIDF Amanah said the benchmark 10-year Malaysian Government Securities (MGS) yield fell by 15 basis points to 3.72 per cent in July 2024, down from 3.87 per cent in June 2024.

The 10-year MGS yield exhibited a broadly declining trend throughout the month, with an intra-month high of 3.88 per cent registered early in July.

"We are maintaining our 10-year MGS target of 3.68 per cent for now. We acknowledge the possibility of the 10-year yield closing the year lower than our year-end target due to faster foreign inflow into the domestic bond market.

"Hence, we might revise our year-end target soon if macroeconomic indicators signal a further bond market rally," it said.

Meanwhile, new issuances of MGS and Malaysian Government Investment Issue (MGII) remained steady at RM15.0 billion in July 2024, with three auctions totalling RM13.0 billion. 

The average bid-to-cover ratio stood at a healthy 2.49 times, up from 2.40 times in June 2024, and private issuances amounted to RM2.0 billion.

"Net issuance rebounded to RM4.0 billion after contracting by RM6.5 billion in June. As of July, outstanding government bonds remained around RM1.20 trillion," it added.