KUALA LUMPUR (Nov 21): Malaysia’s central bank made two unusual changes to the government bond auction calendar by rescheduling a tender set for this month, and scrapping another pencilled in for December.

A reopening of 10-year Malaysian Government Securities has been moved to December, from November, while a three-year Government Investment Issues auction, previously set for the final month of 2024, has been removed from the calendar on Bank Negara Malaysia’s (BNM) website.

The auction calendar was recently updated to “reflect the latest funding requirements of the Government of Malaysia”, BNM said in a written response to The Edge's queries.

In a reopening, the Malaysian government sells additional amounts of a previously issued bond, which enlarges the size of the outstanding issue. The new paper carries the same maturity date and coupon.

Malaysian Government Securities (MGS) and its Islamic counterpart Government Investment Issues (GII) are issued following competitive auctions by BNM on behalf of the government. BNM publishes an annual calendar that outlines the type and number of issuances.

So far this year, the Malaysian government has raised as much as RM143 billion from MGS and GII, including through additional issues through private placements.

“Rescheduling of auction happened before but this is the first time for cancellation, as far as we are aware,” said Maybank Investment Bank analyst Winson Phoon. “This means only one auction left for the year, instead of two.”

He speculated that the government’s lower budget deficit for 2024 could be one of the two reasons for the change, which would be “most positive” as the government typically meets rather than outperforms its deficit target.

The government estimates a fiscal deficit of RM84.3 billion as higher tax collections boosted government revenue. Malaysia’s economic growth, meanwhile, has been stronger than expected, helping to narrow the budget shortfall to 4.3% as a percentage of gross domestic product.

The other reason could be a change in the funding mix of bonds and shorter-term Treasury bills, which would be “less positive, as the lower duration supply impact could be temporary”, said Maybank's Phoon.

The changes could be also due to a combination of both reasons, he said, adding that the move should benefit ringgit bonds because of lower supply in the market. 

The government expects MGS issuances to total RM90.5 billion and GII to gross RM92.5 billion this year, according to the Fiscal Outlook and Federal Government Revenue Estimates published in October.

The shorter-term Treasury Bills, which mature in one year or less, would decrease by nearly half to RM23 billion compared to 2023 to mitigate government refinancing risks, the Ministry of Finance said.