KUALA LUMPUR, Nov 5 (Bernama) -- Bursa Malaysia closed higher, buoyed by Bank Negara Malaysia’s (BNM) decision to maintain the Overnight Policy Rate (OPR) at 2.75 per cent, alongside positive cues from Wall Street. At 5 pm, the FTSE Bursa Malaysia KLCI (FBM KLCI) rose 19.30 points, or 1.19 per cent, to 1,635.86 from Wednesday’s close of 1,616.56. The benchmark index opened 6.72 points higher at 1,623.28, and fluctuated between an intraday high of 1,642.44 and a low of 1,622.62 during the trading session. However, market breadth was negative, with losers outnumbering gainers 723 to 497, while 466 counters were unchanged, 1,075 untraded and 10 suspended. Turnover rose to 3.74 billion units valued at RM3.61 billion compared with yesterday’s 2.81 billion units valued at RM2.57 billion.
Corporate borrowers are pressing pause on bond sales as rising oil prices and a prolonged Middle East conflict push credit risk sharply higher.
A spike in credit-default insurance costs signals growing investor concern about slowing growth and rising inflation — a toxic mix for corporate balance sheets.
Key Takeaways
European bond issuance delayed as credit spreads widen
Investment-grade and junk credit risk gauges jump to multi-month highs
US Treasury yields rise to 4.21%, rate-cut bets trimmed
Private credit stress adds to market anxiety
Credit Insurance Costs Jump
In Europe:
The iTraxx investment-grade index hit its highest level since May
The junk-rated Crossover index crossed 300 basis points for the first time since June
In Asia:
Credit default swaps on investment-grade debt widened 9 basis points — the biggest move in 11 months
Key Point: The surge in credit spreads reflects mounting fears of a prolonged oil-driven economic slowdown.
Borrowers Delay Debt Sales
Several European corporate and financial issuers postponed bond deals.
Last week’s conflict had already slowed issuance. Now:
A growing pipeline of companies is waiting for calmer conditions
European issuance was expected at €15–30 billion this week
US dealers had anticipated roughly US$60 billion in supply
Primary markets remain fragile but not fully closed.
Oil Shock Raises Inflation Fears
Crude Oil remains elevated amid the Iran war.
Higher oil prices increase:
Corporate input costs
Inflation expectations
Borrowing costs
Default risk
At the same time, benchmark 10-year US Treasury yields rose to 4.21%, and traders reduced expectations for Federal Reserve rate cuts.
Private Credit Stress Adds Pressure
The oil shock is compounding existing concerns in private credit markets.
BlackRock Inc. recently limited withdrawals from one of its large private credit funds.
Risks include:
Heavy exposure to software firms
AI disruption concerns
High-profile credit blowups
Key Point: Credit markets were already fragile — oil is adding another layer of stress.
Returns Quickly Erode
The global high-grade credit index has erased nearly all year-to-date gains after being up 1.6% just over a week ago.
Less than 15 out of 4,000 euro high-grade bonds rose on Monday — a sign of broad-based pressure.
Outflows have also begun from euro investment-grade funds, potentially ending a long period of strong investor demand.
Investor Strategy: De-Risk
Some asset managers are shifting toward:
Higher-quality bonds
Shorter maturities
Reduced exposure to lower-rated credits
As one CIO put it:
“This is the time to de-risk.”
Bottom Line
Credit markets are flashing warning signals:
Widening spreads
Rising Treasury yields
Delayed issuance
Private credit stress
Inflation risks from oil shock
If energy prices stay elevated and conflict drags on, corporate funding costs could climb further — tightening financial conditions globally.
Overall theme: Rising oil prices and geopolitical uncertainty are pushing credit markets into defensive mode.
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