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Saturday August 8, 2009
Bond market improves onbetter sentiment
BY YAP LENG KUEN
KUALA LUMPUR: The bond market, which includes all long and short-termpapers, has seen an 8% growth over the last seven months, according toBond Pricing Agency (BPA).Based on the net change in amount of bonds outstanding, this almostdoubled the 4.61% recorded last year, BPA chief executive officer Meor Amri Meor Ayob told
StarBizWeek 
.“Sentiment has improved over the last two to three months,’’ he said,adding that strong names attracted over-subscription.Government bonds were the star with a net change of RM32.3bil in thefirst seven months compared with RM34.2bil for the whole of last year.However, the corporate bond market is showing signs of improvement.“Confidence in the corporate bond market started to regain momentum inthe earlier part of the second quarter,’’ Wan Murezani Mohamad, head of fixed income research, Malaysian Rating Corp Bhd, told
StarBizWeek 
.“This could have been due to less dovishness in the central bank’srhetoric, front-loaded monetary easing and fiscal stimulus packagesgaining traction.’’In the primary market, new corporate bond issuance rose by 99% toRM19.3bil for the second quarter compared with the average in theprevious three quarters.In the secondary market, a daily average volume of RM195mil crossedhands in the second quarter, a 50% jump from that recorded in theprevious quarter.New corporate bond issuance rated by RAM Rating Services Bhd stoodat RM6.8bil as at end-July, of which RM5.5bil, or 81%, was raised in thesecond quarter.“Our second-quarter issuance was 4.3 times larger compared withissuance in the first quarter,’’ said Liza Mohd Noor, CEO of RAM Ratings.RAM Ratings had received a higher number of rating requests andregistered a higher pick-up in mandates for new ratings as early as Apriland the momentum has accelerated in the past two months.Given the sizeable rating mandates in its pipeline, RAM Ratings hasrevised its 2009 forecast on gross corporate debt issuance to betweenRM30bil and RM35bil from RM25bil.With government bond yields coming under pressure of high supply, yieldsfor conventional and Islamic corporate bonds had been increasing over the same period, said Meor.“There is less flight to quality in tandem with the return of investors’confidence,’’ Liza said, adding that the switch to higher-yielding corporatebonds on a selective basis was also exerting pressure on governmentbond yields.
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