KUALA LUMPUR: The Malaysian bond market remains steady post-14th General Election (GE14) as yield changed less than five basis points, whilst the 10-year and five-year bond tenures hardly moved, said Bank Negara Malaysia (BNM) Governor Tan Sri Muhammad Ibrahim.
“I do not foresee any issue there, however, BNM would determine the market mechanism works well and liquidity remains good, in the sense that if an interested party wants to buy there is available bonds and vice versa,” he said.
Muhammad said this during the question-and-answer session in conjunction with the announcement of Malaysia’s first-quarter Gross Domestic Product performance here today.
The participation of institutional entities would continue to support the bond market, he noted.
“Our bond market is deep, with strong institutional entities in the market that save bonds,” he said.
For the first quarter of this year, the foreign holdings of Malaysian government bonds stood at 27.4 per cent due to net inflows in anticipation of higher returns.
During the period, the foreign holdings of government bonds were held by asset managers with 42.1 per cent share, government/central bank (32.3 per cent), pension funds (17.4 per cent) and the remaining were held by banks, insurance companies and others.
On the review of infrastructure projects under the new government, Muhammad said the impact on the bond market would only be visible after the new plans and initiatives were revealed later.
“As far as the government bond issuance is concern, we already have an issuance calendar, however, for the private bond, we expect there might be some changes which will be evaluated later,” he said.
Meanwhile, on the national external debt, he said it remained manageable and would be monitored continuously.
Malaysia’s external debt maturity consisted of short-term tenure at 44.5 per cent while the medium to long term tenure stood at 55.5 per cent.
“There is a limited roll-over risks as more than half were skewed towards medium to long term tenures,” he said, adding that more than a third is ringgit denominated and not subjected to valuation changes as foreign exchange debt are mostly subjected to either prudential safeguards or flexible terms.