Picture Source: https://www.arabnews.com/node/2273466/business-economy

Malaysian Rating Corp Bhd (MARC) projects that Malaysia’s corporate bond and sukuk issuances for this year will range between RM90 billion and RM100 billion. Despite the challenging economic conditions and global trends that can impact capital markets, MARC remains optimistic about sustained activity. The uncertainties surrounding economic growth, inflation rates, and geopolitical factors may introduce volatility and affect investor sentiment. Regulatory reforms and technological advancements, including artificial intelligence and blockchain, pose challenges and opportunities for market participants.

According to Datuk Jamaludin Nasir, the Group CEO of MARC, the corporate bond market is expected to remain active, particularly for project-based issuances. Although there has been a slight lag in the first five months of the year, Jamaludin anticipates a pickup in the second half based on the issuance applications in the pipeline. Malaysia’s bond market, known for its competitiveness and ability to provide long-term project financing, remains advanced compared to the regional market.

The recent rise in overnight policy rates is expected to pose some challenges. Due to higher issuance costs, MARC foresees pushback from clients and increased pressure on project-based issuances. The investor composition in Malaysia’s bond and sukuk market has traditionally been dominated by locals, with approximately 75% of investors being domestic and the remainder foreign. However, the impact of rising rates by the Federal Reserve has attracted foreign investors to the fixed-income market, leading to a slight growth in the industry.

Jamaludin emphasized the importance of adapting to technological advancements and leveraging them for efficiency and innovation. He highlighted the need for market participants to navigate regulatory changes effectively and embrace digital transformation. MARC recognizes the dynamic nature of the capital market and will continue to monitor economic trends and regulatory developments to provide comprehensive ratings and insights to market participants.

Despite the potential challenges, MARC remains optimistic about Malaysia’s corporate bond and sukuk market, anticipating continued activity and opportunities for financing projects in the country. The agency’s expertise and commitment to providing reliable credit ratings will support market stability and facilitate sustainable growth in Malaysia’s capital market.

Read Further here: https://www.thestar.com.my/business/business-news/2023/05/17/bond-sukuk-issuance-to-reach-rm100bil-this-year