Malaysia’s bond and sukuk market plays major role in supporting economic growth

May 13, 2017

The Malaysian bond and sukuk market continues to play a major role in supporting economic growth through the financing of business expansion and infrastructure development.

Second Finance Minister Johari Abdul Ghani said the government aspired to see further initiatives in promoting more active participation in the local currency bond markets.

“We hope to see more programmes that improve foreign investor access to local bonds, derivatives and hedging, and market liquidity,” he said at the RAM League Awards Night 2017.

Johari said despite geopolitical unrest, cautious sentiment and outflows of bond funds, the Malaysian capital market grew to RM2.84 trillion in 2016, underpinned by a 4.5% expansion in the bond market which stood at RM1.17 trillion at the end of 2016.

He said Malaysia had succeeded in keeping the country’s position as the largest local-currency bond in Asean and the third-largest as a percentage of gross domestic product in Asia, only after Japan and South Korea.

Meanwhile, RAM Holdings Bhd Chairman Siti Norma Yaakob said to date, RAM had rated 2,691 bond and sukuk issuances totaling US$289 billion.

“We have also rated a cumulative total of 538 sukuk issuances totaling US$150 billion (RM651.83 billion). Many of these are firsts and landmark structures in the market,” she said.

She expressed confidence that the Malaysian bond market could be developed into a vibrant and highly-attractive ecosystem for fundraising and investment.

“The Malaysian bond market must continue to innovate and add value to investors,” she said, adding that a new area to place greater attention is sustainable investing.

Market-based fundraising in Malaysia this year is expected to exceed RM100 billion from RM98.5 billion in 2016.

RAM has also broadened its rating activities to foreign entities across 13 countries, she said. –Bernama