Wednesday, August 3, 2011

M'sian bond market activity remains solid, says RAM Ratings

KUALA LUMPUR: The Malaysian corporate bond market posted a robust 12.2% year-on-year (y-o-y) growth in 1H 2011, underpinned by a surge in the value of new debt issuances, said RAM Ratings.

In a statement Wednesday, Aug 3, the ratings agency said that almost RM21.2 billion (or 67.9%) of the RM31.2 billion bonds issued up to end-June 2011 came from new issuances.

For the same period last year, only RM6.4 billion (or 23.0%) of total bonds issued were new issuances, it said.

RAM Ratings said new issuances refer to the initial issuance of a debt programme.

RAM Ratings chief executive officer Chong Kwee Siong said the strong increase in total issuance showed that the bond market remained an attractive avenue of funding.

'We are also pleased to note that 57.5% of the RM12.7 billion newly rated issues taken up by investors in 1H 2011 are rated by RAM Ratings.

'The bulk (63.0%) of RAM-rated issues comprised sukuk, from issuers such as SARAWAK ENERGY BERHAD [] and Gulf Investment Corporation,' he said.

For the rest of 2011, RAM Ratings said it anticipates a pick-up in infrastructure projects and capital-raising exercises by financial institutions to continue driving the bond market.

'RAM Ratings also expects the healthy amount of private debt securities (PDS) in the pipeline to support activities in the bond market.

'The PDS pipeline encompasses new debt programmes which have not been issued, as well as those in various stages of being brought to the market,' it said.

Regulatory impetus will also play a key role in keeping the bond market buoyant in 2H 2011 and the longer term.

'The revised Securities Commission's guidelines for the issuance of PDS and sukuk, which come into effect in August, will help shorten time-to-market, enhance disclosure standards and provide further clarity on the application of Shariah rulings and principles ' a win-win situation for issuers and investors alike.

All in all, we are maintaining our projections for 2011,' said Chong.

In February, RAM Ratings had projected total bond issuance of up to RM60 billion for the year.


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