Market Summary

Yield Movements

Malaysia's local currency (LCY) government bond yields rose between 2 February and 29 May, gaining 12 basis points on average across all maturities. The rise reflected higher inflation concerns following escalating tensions in the Middle East and increased oil prices. Despite inflationary risks, Bank Negara Malaysia kept the overnight policy rate at 2.75% on 7 May, supported by resilient domestic demand and manageable inflation.

Local Currency Bond Market Size and Issuance

Malaysia's LCY bond market grew 1.6% quarter-on-quarter (q-o-q) to MYR2.3 trillion at the end of March, faster than the 0.8% q-o-q expansion in the previous quarter. Growth was supported by higher Treasury bonds outstanding, following increased issuance. Corporate bonds outstanding also rose 1.5% q-o-q due to fewer maturities. Total LCY issuance fell 2.5% q-o-q, as lower corporate bond sales offset a 44.9% q-o-q jump in Treasury bond issuance.

Sustainable Bond Market

Sustainable bonds outstanding in Malaysia reached USD20.2 billion at the end of March, up 3.1% q-o-q, lifting its share of emerging East Asia's total to 2.6% from 2.5% in the previous quarter. Sustainability bonds remained the largest segment, accounting for 69.0% of the total, and private sector bonds comprised 82.6% of outstanding sustainable bonds. Over half of private sector sustainable bonds carried tenors of more than 5 years, bringing the market's size-weighted average tenor to 8.0 years.