Author Topic: Foreigners lose appetite for Bank Negara bonds  (Read 52803 times)

Offline jollybee

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Foreigners lose appetite for Bank Negara bonds
« on: October 01, 2013, 10:54:27 PM »


Foreigners lose appetite for Bank Negara bonds
   
Chan Quan Min, KiniBiz
3:58PM Oct 1, 2013
 
KINIBIZ Bank Negara Malaysia’s inaugural sale of 30-year bonds, the country’s longest-maturity offering ever may have been 2.44 times oversubscribed, but foreign buyers were noticeably absent, the Wall Street Journal reported today.

The bonds were worth a total of RM2.5 billion maturing September 2043 and were priced to yield 4.935 percent. US Treasury bonds of similar maturity yielded 3.7 percent.

The Wall Street Journal, quoting banking sources, said the benchmark offering mainly drew domestic pension funds and insurers. Foreign buyers stayed away.

Concerns that the US Federal Open Market Committee (FOMC) would scale back the Federal Reserve’s monetary easing or quantitative easing has led to an outflow of foreign hot money from local shores in recent months.

“If we look at the flow from the last few weeks since FOMC, we’ve seen a big outflow from this side. That has left foreign investors less interested,” Wan Mohd Fakruddin Razi, chief investment officer at MCIS Zurich Insurance said to the widely-circulated international newspaper.

Investors aren’t willing to take the currency risk and “bring in new money,” he added.

The Wall Street Journal cited Malaysia’s debt burden as a particular concern to international investors. Compared to other major Asean economies such as Indonesia, Thailand and Vietnam, Malaysia comes up tops in the value of local currency bonds outstanding.

According to Asian Development Bank calculations, Malaysia has US$145 billion (RM469 billion) in local currency bonds outstanding compared to only US$89 billion (RM288 billion) for Indonesia in second place.

Malaysia’s investment-grade-rated sovereign debt has historically seen high levels of foreign buyers, the Wall Street Journal noted, but recent months have seen a selloff.

Foreign ownership of government bonds fell from 49.5 percent in May to 40.0 percent in July, according to the latest available data from Bank Negara.

The central bank issued long maturity bonds last month to fund infrastructure spending. Analysts note that longer-term bonds are more viable for infrastructure projects because it avoids a maturity mismatch.

Prime Minister Najib Abdul Razak is due to make his 2014 Budget announcement later this month on Oct 25.

News sources suggest Najib is raising funds as part of a multi-billion dollar infrastructure development programme.
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Offline Arpan uddin

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Re: Foreigners lose appetite for Bank Negara bonds
« Reply #1 on: March 08, 2015, 07:30:05 PM »
Bonds are always remain different situation.Its always depends on market situation.
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Offline Alisatube

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Re: Foreigners lose appetite for Bank Negara bonds
« Reply #2 on: August 15, 2018, 12:59:45 PM »
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