KUALA LUMPUR: Malaysian Rating Corp Bhd (MARC) expects the Malaysian government to raise up to RM88 billion in Malaysian Government Securities (MGS) this year, while not discounting the possibility of a retail bond offering.
MARC head of fixed income research Wan Murezani Wan Mohamad said MARC expects the government to raise around RM86 billion to RM88 billion this year in MGS to finance its budget deficit and maturing bonds.
This, Wan Murezani said, was higher than the RM58.1 billion raised by the government in 2010.
Speaking at MARC's investors briefing on Tuesday, March 22, Wan Murezani said the government could offer a retail bond this year given its past success and the government's ongoing efforts to boost retail participation in the bond market under the Economic Transformation Program (ETP).
"With US$1.75 billion of international bonds maturing in 2011, there is motivation for the government to tap this market for benchmark continuation rather than to support its financing needs as the local market is flushed with liquidity," he said.
Wan Murezani also said corporate bond issuance is projected to hit RM50 billion compared with the RM48 billion raised in 2010.
Wan Murezani said despite a rebound in the economy which led to a 75 basis points hike in the overnight policy rate (OPR), bond yields remained low in 2QFY10 and 3QFY10.
According to Wan Murezani, last year saw lower corporate default rates and declining corporate downgrade-to-upgrade ratios due to improved operating environment driven by a pick up in economic activity.
"Increasing global liquidity thanks to the quantitative easing in the US will find its way into emerging currencies, raising bets on further strengthening of the ringgit and resulting in foreign funds flowing into the MGS market," he said.
MARC head of fixed income research Wan Murezani Wan Mohamad said MARC expects the government to raise around RM86 billion to RM88 billion this year in MGS to finance its budget deficit and maturing bonds.
This, Wan Murezani said, was higher than the RM58.1 billion raised by the government in 2010.
Speaking at MARC's investors briefing on Tuesday, March 22, Wan Murezani said the government could offer a retail bond this year given its past success and the government's ongoing efforts to boost retail participation in the bond market under the Economic Transformation Program (ETP).
"With US$1.75 billion of international bonds maturing in 2011, there is motivation for the government to tap this market for benchmark continuation rather than to support its financing needs as the local market is flushed with liquidity," he said.
Wan Murezani also said corporate bond issuance is projected to hit RM50 billion compared with the RM48 billion raised in 2010.
Wan Murezani said despite a rebound in the economy which led to a 75 basis points hike in the overnight policy rate (OPR), bond yields remained low in 2QFY10 and 3QFY10.
According to Wan Murezani, last year saw lower corporate default rates and declining corporate downgrade-to-upgrade ratios due to improved operating environment driven by a pick up in economic activity.
"Increasing global liquidity thanks to the quantitative easing in the US will find its way into emerging currencies, raising bets on further strengthening of the ringgit and resulting in foreign funds flowing into the MGS market," he said.
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