KUALA LUMPUR: Malaysian Rating Corporation Bhd (MARC) expects the gross issuance of Malaysian Government Securities (MGS) and Government Investment Issue (GII) to be in the range of RM110 billion and RM120 billion for 2019.
MARC said this was based on the government’s projected budget deficit of RM52.1 billion and redemption value of RM67.9 billion.
“We also take into account the net proceeds from the 10-year 200 billion Japanese yen Samurai bond issuance in March. In January to July 2019, net issuance of MGS/GII papers amounted to RM51.4 billion. Going forward, RM41.8 billion worth of MGS/GII is expected to mature in August to December 2019,” it said in a statement today.
MARC said gross issuance of MGS/GII papers had risen to RM77.5 billion in January until July 2019 with GII dominating the issuance.
It said the RM77.5 billion was raised through 20 offerings with RM38 billion via MGS and RM39.5 billion via GII, slightly higher than the amount in the corresponding period last year.
“Demand was slanted towards GII with maturities of more than 10 years with support mainly coming from local institutional investors,” it said.
Going into August until December 2019, MARC expects additional MGS/GII issuance of between RM32.5 billion and RM42.5 billion, with the average issuance size expected to be around RM3.0 billion and RM3.5 billion for the remaining 12 scheduled offerings.
It said total private placements would also trend lower for the remaining issues.
“However, we expect the positive sentiment for MGS/GII papers seen at public auctions in January until July 2019 to continue for the rest of the year given the ample supply of highly-in-demand longer-dated notes scheduled for upcoming auctions.
“Demand for these notes would be supported by yield hunting activities as global central banks become increasingly dovish,” it said.