This article first appeared in The Edge Financial Daily on April 19, 2018

KUALA LUMPUR: Amid global uncertainties, recent positive upturns have resulted in a significant jump in corporate bond issuance from Feburary to March, rising from RM6.9 billion to RM13.1 billion.

RAM Ratings Services Bhd attributes the upturn to the private sector — most notably banking entities — which added RM7.9 billion to gross issuance.

“This lifted the year-on-year (y-o-y) issuance in the first quarter of 2018 (1Q18) by 7.3% to RM29.6 billion (1Q17: RM27.6 billion),” it observed in the Bond Market Monthly.

Notwithstanding global uncertainties and developments, particularly from the rising trade tensions between the US and China, foreign holdings in Malaysian bonds recorded a positive net inflow of RM2.9 billion, of which 72.2% of total inflows were shorter-term papers.

“Bank Negara Malaysia’s GDP (gross domestic product) growth projection of 5.5% to 6% — higher than the consensus forecast and slightly above RAM’s expectation of 5.2% — pointed towards continued domestic strength, coupled with moderating headline inflation numbers,” RAM Ratings added.

The ringgit’s stability also helped attract bond investors as the currency saw a monthly average appreciation to RM3.90 in March from RM3.91 in February; it continues to strengthen in April and is currently trading at about RM3.88.

The ringgit’s appreciation in April is the result of dips in technology stocks and concerns over an increased probability of a US-China trade war, which is putting downward pressure on the US dollar.