Published February 3, 2009

Good time to look at bonds: RAM

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(KUALA LUMPUR) Local ratings agency RAM Rating Services Sdn Bhd expects Malaysia's bond yields to remain weak for most of the year before rebounding in the last quarter, says a report in Malaysia's Business Times.

Bond yields have been on a downward trend on the back of interest rate cuts and liquidity measures by the government.

'On that basis, it is a good time to look at the bond market for the opportunity to lock in long-term funds,' RAM Rating's newly appointed chief executive officer Liza Mohd Noor told the paper.

She said that if companies were to successfully refinance some of their loans in the bond market, the move would probably have a positive impact on their total cost structure.

Lower interest rates have spurred bond issuances in many markets as companies and governments take advantage of low yields.

RAM Rating expects bond issuances in Malaysia this year, at between RM20 billion (S$8.4 billion) and RM25 billion worth, to mirror last year's.

In the first six months of 2008, it rated some RM89 billion worth of bonds. Only about half, or RM44.1 billion, saw the light of day. Of this, RM20.8 billion had been issued by the year-end.

RAM Rating is projecting the country's gross domestic product (GDP) to grow between 2 per cent and 3 per cent this year.

Ms Liza said that GDP growth was anchored by both consumer spending and public investment in the form of stimulus packages.

'A lot of the monetary policies have not worked through the economic cycle . . . (but) it has only been three months. Hopefully, in 2009, we will see more robust economic activities,' she said.

Ms Liza said the second stimulus package was expected to bring more good news as it was seen to focus more on making funding accessible to deserving corporate players.

RAM Rating has 70 per cent of the RM272 billion outstanding bonds ratings.