Market Summary
Size and Composition

Total local currency (LCY) bonds outstanding in Malaysia stood at MYR1,167 billion (USD260 billion) at the end of the fourth quarter (Q4) of 2016, a decrease of 0.1% quarter-on-quarter (q-o-q) but an increase of 4.3% year-on-year (y-o-y). The q-o-q contraction was due to corporate bonds falling 0.5% q-o-q, offsetting the 0.3% q-o-q increase in government bonds. Government and corporate bonds outstanding grew 3.6% y-o-y and 5.2% y-o-y, respectively. Sukuk (Islamic bonds) comprised 41.7% of total LCY government bonds outstanding and 73.9% of total LCY corporate bonds outstanding at the end of December.

Corporate Bond Issuance

Corporate bond issuance fell to MYR30.3 billion in Q4 2016 from MYR39.9 billion in Q3 2016. Danainfra Nasional was the largest corporate issuer in Q4 2016 amounting MYR4.5 billion from multi-tranche issuance.

Policy and Regulatory Developments

In November, Bank Negara Malaysia (BNM) moved to discourage trading of Malaysian ringgit in the nondeliverable forward (NDF) market. The central bank sees it as speculative activity that can potentially destabilize the Malaysian ringgit. According to BNM, while the foreign exchange administration is unchanged and no new measures were introduced, existing rules that prohibit facilitation of Malaysian ringgit NDFs will be reinforced. Transactions relating to offshore Malaysian ringgit NDF market activities will not be recognized as the Malaysian ringgit is not an internationalized currency.