Standard & Poor's Maintains Strong Outlook For Malaysia's Bond Market

Standard & Poor’s Maintains Strong Outlook For Malaysia’s Bond Market.

KUALA LUMPUR, Feb 8 (Bernama) — Despite the shaky prospects of the global economy, Standard & Poor’s Ratings Services maintains a strong outlook for Malaysia’s bond market, reflecting positive bond market developments, ongoing growth in Islamic finance and steady macroeconomic fundamentals in the country.

It said Malaysia’s bond market stands out by becoming the Islamic finance centre for Asia with smart regulations and a growing ecosystem around Islamic finance.

“About 70 per cent of Malaysia’s domestic debt issuance is in the form of sukuks, making it the world’s largest Islamic bond market, with over 60 per cent of the global sukuk issuances originating from Malaysia, it said in a statement.

Standard & Poor’s managing director Surinder Kathpalia said policymakers in emerging markets viewed Malaysia as a “poster child” for bond market developments, given that it was now the fourth largest bond market in Asia after Japan, China and South Korea.

“Malaysia’s bond market has a strong infrastructure and a record of solid growth due to a transparent and predictable regulatory environment, availability of independent credit research, existence of risk-free bonds of various tenures and a bond-pricing service,” he said in a statement.

Southeast Asian local currency bond markets, including Malaysia’s, continued to bustle last year, with local currency bond issues providing alternative funding and investment options for Asian issuers and investors when issuances in G3 currencies (US dollar, euro and Japanese yen) in Asia stalled.

Kathpalia said: “It wasn’t just companies in the Asean region that tapped the markets, those in Hong Kong, India and South Korea also issued bonds in the region.

Companies in Southeast Asia are likely to continue to seek alternative funding sources as those in the G3 markets (the United States, Japan and the Eurozone) become harder and more expensive to tap, he added