KUALA LUMPUR: Malaysia's corporate bond and sukuk financing is expected to remain healthy with a pipeline of RM110 billion to RM120 billion in 2024.
RAM Ratings said this will be driven by private refinancing initiatives, continued infrastructure financing needs and financial institutions' capital augmentation plans.
Corporate ringgit bond issuance stood at RM118.3 billion in 2023, close to RAM's estimates and level with the 2017-2021 average of RM116.4 billion.
Key sectors that led the issuance were financial (RM44.4 billion) and energy and utilities (RM21.1 billion).
"Meanwhile, gross issuance of Malaysia Government Securities (MGS) and Government Investment Issues (GII) climbed to RM190.9 billion in 2023 (2022: RM171.5 billion), the largest supply on record.
"Looking ahead, we expect MGS and GII issuance to moderate slightly to circa RM170.0 billion-RM180.0 billion, underscored by the government's smaller deficit financing requirement," it said in a statement,
In terms of funds flow, foreign participation in the bond market increased last year.
Overall net inflow totalled RM23.6 billion, reversing from a net outflow of RM9.8 billion in 2022 as investor sentiment improved on the possibility of US rates having peaked and rate cuts heading into 2024.
Moving forward, RAM said the focus will remain on the timing of the US Federal Reserve (Fed) pivot in driving funds flow.
"Given recent hawkish tone adopted by some Fed officials and strong US data releases, financial market volatility might persist in the near term, but we expect the ringgit bond market to continue to chart an overall net fund inflow this year on the back of falling interest rates globally," it added.