Monday January 7, 2013
Prasarana bonds to do well on pent-up demand
By DANIEL KHOO
PETALING JAYA: Potential investors, although “keen and hungry” for Syarikat Prasarana Negara Bhd's (Prasarana) bonds, will await more details on the potential yield rates first.
Fixed income analysts opined that the demand for the bonds comes on the backdrop of the tight supply of such bond instruments in the region.
“There seems to be a lack of such bond instruments in the market at present. The underlying demand is strong, given that such Prasarana bonds are usually government guaranteed and can be considered equivalent to the risk-free Malaysian Goverment Securities (MGS),” RAM Holdings group chief economist Dr Yeah Kim Leng told StarBiz.
“The strong demand comes from various quarters, including foreigners, funds and financial institutions. The risk of such bonds is equivalent to Malaysia's sovereign risk, and thus, there is a high chance for the yields to be reflective of MGS with a small risk premium,” he said.
Another fixed income analyst with a foreign bank-backed institution said the current situation presented a good opportunity for Prasarana to raise funds. There could also be a chance for some of the public transportation giant's bonds to be refinanced as well given the strong investment appetite seen internationally, the analyst added.
RHB Research's regional head of fixed income research Ray Choy, meanwhile, said Prasarana's bonds would be of safe quality and yields of a comparable Prasarana bond maturing in August 2021, last traded at 3.76 at press time.
“I think these are fairly valued but cannot be representative of a comparable bond maturing on another date,” he noted.
Bloomberg data showed the yields of Prasarana's bonds and sukuk had last traded in the range of 3.77 to 5.07, with the first of these bonds set to mature in May 2015 and the last in September 2029.