Published on 26 Jan 2024.
Corporate ringgit bond issuance grossed RM118.3 bil in 2023, close to our estimates and level with the 2017-2021 average of RM116.4 bil. Key sectors that led issuance were financial (RM44.4 bil) and energy and utilities (RM21.1 bil). We expect corporate bond/sukuk financing to remain healthy with a pipeline of RM110 bil-RM120 bil in 2024, driven by private refinancing initiatives, continued infrastructure financing needs and financial institutions’ capital augmentation plans.
Meanwhile, gross issuance of MGS and GII climbed to RM190.9 bil in 2023 (2022: RM171.5 bil), the largest supply on record. Looking ahead, we expect MGS and GII issuance to moderate slightly to circa RM170.0 bil-RM180.0 bil, underscored by the government’s smaller deficit financing requirement.
In terms of funds flow, foreign participation in the bond market increased markedly last year. Overall net inflow totalled RM23.6 bil, reversing from a net outflow of RM9.8 bil in 2022 as investor sentiment improved on the possibility of US rates having peaked and rate cuts heading into 2024. Moving forward, the timing of US Federal Reserve (Fed) pivot will still take centre stage in driving funds flow. Given recent hawkish tone adopted by some Fed officials and strong US data releases, financial market volatility might persist in the near term, but we expect the ringgit bond market to continue to chart an overall net fund inflow this year on the back of falling interest rates globally.
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