Published on 20 Jan 2023.
Primary bond market activity was robust last year, with total corporate bond issuance surging to RM153.0 bil, up from RM114.3 bil in 2021. The prolific overall issuance last year was to a large extent fuelled by a major refinancing and fundraising exercise by Projek Lebuhraya Usahasama Berhad in December 2022, which contributed RM25.2 bil or 16.5% of total corporate bond issuance.
Issuances from the financial (RM49.1 bil) and transportation & storage (RM44.0 bil) sectors dominated the primary bond market, together accounting for around 60.8% of overall supply. For 2023, we expect overall corporate bond issuance to reach RM120 bil-RM130 bil, propelled by private refinancing initiatives, continued infrastructure financing needs and financial institutions’ capital augmentation plans.
Gross issuance of MGS and GII rose for the third consecutive year to RM171.5 bil in 2022 (2021: RM163.9 bil), the largest on record. Looking ahead, we expect MGS and GII issuance to amount to RM170 bil-RM180 bil in 2023, taking into account the government’s deficit financing requirement as well as the refinancing of debts maturing this year.
Overall foreign fund flows turned negative (RM9.8 bil) in 2022 amid the broad and persistent bond market selloff last year, the first net foreign outflow since 2018. Selloff pressure appeared to wane towards the end of 2022 as the US Federal Reserve’s (Fed) messaging became less hawkish, hinting at a slower pace of rate hikes moving ahead. MGS and GII registered a net foreign inflow for the second consecutive month in December 2022 (RM2.7 bil). With expectations that the monetary policy setting will progressively normalise as the Fed moves closer to the end of its tightening cycle, the Malaysian bond market should see more favourable fund flows in 2023.
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