KUALA LUMPUR, July 30 (Bernama) -- Bursa Malaysia's key index closed at an intraday high today, supported by continued buying interest even as renewed geopolitical tensions and a weaker overnight lead from Wall Street following the US Federal Reserve's (Fed) decision to stand pat on interest rates weighed on broader sentiment. The Fed has decided to hold rates steady for the fifth consecutive meeting, with the Federal Funds Rate unchanged between 3.50 per cent and 3.75 per cent. At 5 pm, the FTSE Bursa Malaysia KLCI (FBM KLCI) rose 4.84 points to 1,720.40 from yesterday’s close of 1,715.56. The benchmark index, which opened 1.14 points lower at 1,714.42, hit its lowest level of 1,710.69 in early trade before gaining momentum for the rest of the day. However, the broader market was negative with losers outpacing gainers 581 to 411, while 612 counters were unchanged, 1,173 untraded, and 87 suspended. Turnover declined to 2.49 billion units valued at RM2.25 billion from ...
Companies and governments worldwide are flooding the debt markets, capitalizing on falling yields and the approaching US presidential election. In September alone, over 1,226 debt issuers raised more than $600 billion (RM2.47 trillion), marking the highest issuance for that month in over two decades, according to Bloomberg data.
The US high-grade bond market saw its busiest September on record, while European lenders issued a historic amount of Additional Tier 1 bonds. In China, the offshore market for yuan-denominated notes shattered previous single-month records. Additionally, ByteDance Ltd, the owner of TikTok, is pursuing a $10.8 billion loan, which would become the largest-ever dollar-denominated corporate facility in Asia, excluding Japan.
Market Dynamics and Issuer Motivations
Companies are racing to secure funding before potential market volatility linked to the upcoming presidential election and prior to earnings blackouts. With robust investor demand for bonds and expectations of further interest rate cuts from central banks, the current conditions are favorable for issuers. “The market has been wide open and spreads are tight,” said Kathy Jones, chief fixed-income strategist at the Schwab Center for Financial Research. “If I’m an issuer and I really need to get something done, I want to do it before the election because it can get very noisy and volatile.”
Record-Breaking Borrowing Trends
Blue-chip companies collectively borrowed $170 billion in September, the highest amount ever recorded for that month. In the leveraged loan market, more than $128 billion worth of deals launched, marking the first time issuance exceeded $100 billion since Bloomberg began tracking this data in 2013. The high-yield market also saw over 50 firms issuing nearly $37 billion in bonds.
This borrowing spree has been truly global. In Europe, Additional Tier 1 bond sales reached approximately €13 billion, while Asia-Pacific companies issued over $42 billion in bonds in dollars and euros, representing the highest monthly total since January of last year. Notably, companies in China sold $7.6 billion in dollar notes, with food delivery giant Meituan leading the charge with a $2.5 billion issuance.
Continued Strength in Structured Finance Markets
The structured finance sector has also demonstrated strong performance, with new issue collateralized loan obligations increasing nearly 70% to $142 billion. Additionally, sales of asset-backed securities in the US have reached $277 billion this year, up nearly 25% compared to last year. In the commercial real estate sector, issuance of private label commercial mortgage-backed securities surged 146% to $80 billion as the market rebounds from previous low levels.
Future Outlook and Potential Slowdown
Looking ahead, analysts predict a slowdown in the pace of issuance as the election season approaches. Neha Khoda, head of loan strategy at Bank of America, anticipates a decline in activity. Meghan Robson from BNP Paribas agrees, noting that October issuance is typically lower during election years. The direction of future borrowing will largely depend on growth data; positive economic indicators could sustain strong sentiment, while weaker data might raise concerns about growth and lead to increased market volatility.
As companies and governments capitalize on favorable conditions in the debt markets, the coming months will be crucial in determining the trajectory of borrowing and investment amidst a shifting economic landscape.
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