The latest 20-year Government Investment Issue (GII) auction achieved a solid bid-to-cover ratio of 1.922x, reflecting strong investor interest. The auction size was set at RM3 billion, with an additional RM2 billion allocated to private placements. Total bids amounted to approximately RM5.8 billion, aligning with previous levels seen in the recent 30-year Malaysian Government Securities (MGS) reopening but falling short of the year-to-date average of RM8.7 billion for 20-30 year MGS and GII.
Despite a post-NFP rally in US Treasuries, this momentum has not translated into gains for Ringgit bonds, which have seen little movement in the local market. This morning, the market remained subdued, and there was some unwinding in the foreign exchange market, with the USDRM spot rising by over 200 pips to above 4.35.
In the when-issued (WI) market, price discovery was somewhat subdued, which is typical for long-tenor GIIs. WI quotes initially opened at 4.10/07%, but tightened to 4.095/085% before the close, with no trades executed. The auction results were reasonably strong, with successful yields averaging 4.084%, slightly below the last WI offer of 4.085%. The cut-off yield was 4.091%, showing a small tail of 0.6 basis points (highest minus average).
Looking ahead, the next auction will focus on a reopening of the 7-year MGS 4/31, with an estimated auction size of RM4.5 billion and no private placement anticipated.
Source: Maybank
Title: 20y GII Reopening
