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A Brief Profile Of Bond Market
The bond market in Malaysia has developed significantly in terms of market size, range of instruments and efficiency. The development of the bond market centers on the need to establish a well-diversified financial base to meet the changing needs of the Malaysian economy. Concerted measures to develop the bond market were taken by the Government, and success of these efforts are reflected in the significant growth of the bond market, marking Malaysian bond market as one of the fastest growing bond markets in Asia.  Among the recent key initiatives are:

The Government first issued its inaugural Callable MGS 5NC3 in December 2006 ;
The Government introduced switch auction in January 2007 to improve the overall market liquidity by replacing the off-the-run MGS with the on-the-run MGS;
Bank Negara Malaysia issues its first Sukuk Ijarah Notes in February 2006, as an additional tool to manage liquidity in the banking system;
Bank Negara Malaysia issued the inaugural Bank Negara Monetary Notes (BNMNs) to replace the Bank Negara Bills and Bank Negara Negotiable Notes in December 2006. BNMNs can be issued on discount-to-value, fixed-rate or floating rate coupon bearing bonds. In July 2007, the first floating rate BNMN was issued

As at end-Dec 2010, the size of the bond market reached RM763.4 billion, approximately 97% of GDP.  The bond market has a balance mix of both public sector and private sector bonds, each contributing 45% and 55% share of the total outstanding bond respectively. Today, the corporate bond market makes up approximately a quarter of the total debt financing (including bank loans) to the economy compared with around 10% in 1997.  Such rapid growth is a reflection of the expanding private sector financing needs, especially the considerable infrastructure development needs in Malaysia, which require more long-term financing, have provided a strong impetus to the market.


A wide variety of debt securities products are available in the Malaysian bond market, such as fixed coupon bearing bonds, floaters, asset-backed
securities, convertible bonds, callable bonds, etc. Bond issuers include, among others, the Government of Malaysia, Bank Negara Malaysia, quasi government institutions, corporations as well as multilateral development banks (MDBs). To date, a total of seven issuances of MDB bonds, totalling RM3.7 billion have been issued in Malaysia. More importantly, Malaysia, among the key Islamic financial centres, offers a wide variety of Islamic bonds that are based on Shariah compliant concept. As at end-Dec 2010, Islamic bonds accounted for 39% of total bond outstanding.

 

Last Updated : 05/03/2012 15:09 PM