Foreign Investors Turn Net Buyers of MGS, GII In November 2022 -- RAM Ratings

KUALA LUMPUR, Dec 19 (Bernama) -- Foreign investors have turned net buyers of Malaysian Government Securities (MGS) and Government Investment Issue (GII) in November this year to US$271.26 million (RM1.2 billion, US$1 = RM4.42) after two consecutive months of net selling, says RAM Rating Services Bhd. In a statement today, it said this was due to the less hawkish messaging put out by the United States (US) Federal Reserve (Fed) in early November which had reignited interest in local currency emerging market bonds last month. “However, this was offset by the outflow from Malaysian Treasury Bills (MTB) and Malaysian Islamic Treasury Bills (MITB) of RM2.5 billion, which could be attributed to foreign investors’ inability to roll over funds into fresh papers, given lumpy maturities and relatively muted new MTB and MITB issuances over the last two months,” it said. For 2023, the rating agency projects the issuance of MGS and GII to rise to RM170 billion- RM180 billion, taking into account the government’s larger deficit financing requirement as well as the refinancing of debts maturing next year. The rating agency forecast the issuance of MGS and GII to reach RM165 billion-RM175 billion in 2022, up from RM163.9 billion in 2021. It said in November 2022, MGS and GII issuance stayed robust at RM15.0 billion, bringing the total issuance in the first 11 months of 2022 to RM163.0 billion, which is on track to meet its house forecast of RM165 billion-RM175 billion for the year. On corporate bond issuance, RAM Ratings projects it to reach between RM120 billion and RM130 billion next year, propelled by private refinancing initiatives, continued infrastructure financing needs and financial institutions’ capital augmentation plans. “Corporate bond issuance slowed to RM9.1 billion in November 2022. “Totalling RM109.2 billion year-to-November 2022, corporate bond issuance is likely to come in near the upper end of our estimated range of RM110 billion to RM120 billion for this year against RM114.3 billion in 2021," it said. Overall, RAM Ratings said fund flows remained negative at RM1.0 billion in November 2022, although the outflow was much narrower than the RM6.3 billion in October 2022. -- BERNAMA