Corporate bonds to hit RM120b this year, says RAM Ratings

CORPORATE bond issuance, which grew 5% year-on-year to RM124.2 billion last year, is expected to hit up to RM120 billion this year, according to RAM Ratings Services Bhd.

In a statement today, it said it anticipated some of last year’s strength spilling over into 2025, seeing corporate bond issuance remaining healthy at RM110 billion to RM120 bilillion.

“Infrastructure financing and businesses’ funding needs should also support steady corporate bond issuance activity in 2025,” it said.

For 2024, it said the financial (RM51.7 billion) and real estate (RM19.9 billion) sectors continued to be the primary drivers of issuance, mirroring trends observed in 2023.

It noted that gross issuance of Malaysian Government Securities (MGS) and Government Investment Issue (GII) moderated to RM176.7 billion in 2024, down from the high of RM190.9 billion in 2023.

“Looking ahead, we project MGS and GII issuance to ease further to RM155 billion-RM165 billion in 2025. This takes into account the government’s narrower deficit financing requirement in line with its commitment to fiscal consolidation, as well as more moderate needs in the refinancing of debts maturing this year,” it said.

The Malaysian bond market charted a more moderate foreign fund inflow of RM4.8 billion in 2024 compared to RM23.6 billion in 2023, exacerbated by persistent bond market selloffs throughout most of the year amid heightened uncertainties over the US Federal Reserve’s (Fed) interest rate outlook and the view that rate cuts might not be as forthcoming as initially expected, it added.

“While the selloff eased towards year-end, the Fed’s less dovish stance and recent downgrade of its rate cut expectations in the December dot-plot suggest the lack of a catalyst in spurring foreign investor demand in 2025,” it said. — TMR