Malaysia's debt capital market (DCM) has grown 4.4% year-on-year to reach $550 billion accumulated at the end of the first quarter of 2024.
According to Fitch Ratings, the DCM figures report is likely to remain at the same level in the second half of 2024 or likely to fall following the government's gradual fiscal consolidation with the federal deficit expected to decrease in the near term.
He also said that the issue was the result of the encouragement of financial and corporate institutions as they sought to refinance and diversify funding.
Local DCMs face risks based on the ringgit, interest rates, commodity price fluctuations and global geopolitical events.
Additionally, sukuk is likely to remain dominant in DCM due to its supportive ecosystem unlike most OIC countries.
Local investors in DCM Malaysia are more diverse including banks, pension savings funds, hajj funds, insurance and takaful operators.
DCM issuance in the first half of 2024 fell 8.3% to $45.2 billion due to fiscal consolidation with a lower government deficit compared to 2023.
Bank Negara Malaysia (BNM) also provides regulatory flexibility in multilateral development banks to issue ringgit sukuk and provide ringgit financing to permanent entities without approval.
However, the central bank has kept the Overnight Policy Rate (OPR) at 3.0% and it is likely to remain the same through the second half of 2024 and 2025.
