KUALA LUMPUR: Foreign buying of Malaysian bonds continued into January with a net total inflows of RM3.5bil despite a surge in global yields following the US Federal Reserve’s impending interest rate hike.

       RAM Rating Services Bhd (RAM Ratings) said net foreign purchases of Malaysian Government Securities (MGS) and Government Investment Issues (GII) amounted to RM4.3bil in January.

       The rating agency said UST yields rose broadly across all tenures, with the 10-year yield jumping 27.0 basis points (bps) month-on-month to 1.79% as of end-January and 1.97% as of Feb 25.

       This led to a thinner 10-year MGS-UST yield spread of circa 170 bps in February (average 4Q 2021: 206 bps).

       “The recent Russia-Ukraine conflict represents a key risk to the financial markets in emerging economies, which if prolonged, could dampen foreign investor demand in this region,” RAM Ratings said.