PETALING JAYA: Foreign investors remained net buyers worth RM3.1bil in the Malaysian bond market for the third consecutive month in February.

       The inflow was led by Malaysian Government Securities (MGS) and Government Investment Issues (GII), which totalled RM2.2bil, compared to RM4.3bil in January, RAM Ratings said in a statement.

       It added that foreign holdings climbed to 14.9% of total outstanding bonds, the highest participation rate since April 2018 (15.1%).

       “The foreign inflow continued into February despite the risk-off sentiment and broad flight to safety sparked by the Russia-Ukraine conflict.

       “While the crisis poses downside economic risk, the US Federal Reserve (Fed) is still expected to commence its rate hike cycle at an upcoming meeting in March,” it said.

       With US personal consumption inflation reaching 6.1% in January – the highest since February 1982 – with no signs of slowing down, the Fed would be pressed to act fast before inflation becomes entrenched and creates a drag on economic growth.

       “As such, bond yields continued to trend broadly upwards, with 10-year US Treasuries and MGS yields respectively reaching 1.83% and 3.65% (plus 4.0 basis points and plus 0.1 basis points month-on-month, respectively) as of end-February and 2.00% and 3.66% as of March 11.”