PETALING JAYA: The demand for Malaysian bonds is expected to remain buoyant in the medium to long term, although there could be pressure posed by the more transmissible Omicron variant of the Covid-19 on the foreign holdings of ringgit bonds.
RAM Rating Services Bhd senior economist Woon Khai Jhek told StarBiz it was still too early to tell if foreign outflow pressure would persist, given the ongoing research on its infectivity and effectiveness of current vaccines against Omicron.“Risk aversion is likely to prevail over the near term, as the variant could threaten the reopening of borders and economic activity, which will further impact the economic growth for countries in 2022.
Foreign net purchase of Malaysian bonds rebounded in October this year despite the broad market selloff over the same period. The overall foreign net inflow accelerated to RM2.9bil in October from RM0.6bil the preceding month. Going by statistics, he said foreigners have been net buyers of ringgit bonds to the tune of RM31bil for 2021, with net inflows for eight out of the last 10 months. The percentage of these bonds held by foreigners has also climbed steadily from a low of 23.11% in April 2020 to 27.1% in October 2021, he said.
In terms of bond yields, Phoon said it has been a challenging year for the ringgit government bonds in 2021, with a year-to-date loss in total returns, but expecting a better 2022. On the bond issuance, he is projecting a government bond issuance of about RM160bil this year and for next year. For private debt securities or corporate bonds, Maybank Kim Eng is forecasting a higher RM120bil gross issuance in 2022 compared with RM110bil this year.
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