Government to issue RM79bil bonds

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KUALA LUMPUR: The Government is projected to issue up to RM79bil worth of sovereign bonds this year to finance its fiscal deficit and maturing debts, Maybank Investment Bank Bhd (MaybankIB) says in a recent report.

The research house estimates the value of government debts maturing this year to be around RM42bil. And while the size of the mini-budget has yet to be announced, MaybankIB expects the fiscal stimulus plan to push the country’s budget deficit up to around RM37bil.

Hence, MaybankIB has derived a higher value of fresh issuance of government bonds for 2009, compared with the estimated fresh issuance of around RM60bil last year.

According to MaybankIB head of fixed-income research Tan Chee Wee Tan, investors are now looking towards the announcement of the mini-budget next month to get a clearer indication of the how wide the fiscal deficit is going to be.

Nevertheless, Maybank Investment’s estimate of the Government’s budget deficit for 2009, which represents about 6% of Malaysia’s gross domestic product (GDP), is in line with market consensus. The fiscal deficit for 2008 is estimated to be around 4.8% of GDP or RM30bil.

As for the private debt securities (PDS) market, MaybankIB expects the total gross value of corporate bond issuances to decelerate to between RM35bil and RM40bil this year, given the slowing economic conditions.

“This is premised on our estimate that PDS issuances will fall around 28% (from the year before), similar to the situation in 1998, where PDS issuances fell to RM14.2bil from RM19.6bil in 1997,” it said in the report.

According to Bank Negara, the total gross value of PDS issuances from January to October last year stood at RM45.1bil.

source from the star online by By CECILIA KOK

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