BNM has published the auction calendar 2025 with the total number of auctions remains unchanged at 36 (2024: 36). Average issuance size is expected to be smaller at MYR4.56b (2024: MYR4.86b) as Maybank IB in its forecast expects lower gross MGS+GII supply of MYR164b (2024: MYR175b). The house noted that the MGS:GII issuance mix is evenly split with 18 auctions each and now simplified with same auction number across the tenors for both MGS and GII. Key changes to the calendar are more duration supply and a GII new issue via the Khadamat structure.

A notable shift in the calendar is more long-tenor MGS/GII issuances. The 15y, 20y and 30y bonds will have six auctions each (a total of 18), up from five auctions each (a total of 15) in 2024, while the short to mid-tenor 3y, 5y and 7y will have a total of 12 auctions (four each), down from a total of 15 auctions in 2024. The 10y bonds will still see six auctions like 2024. Maybank IB said it forecasts a record high MYR81b supply of 15-30y bonds in 2025, up by MYR6b from MYR75b in 2024. As a result, the ultra-long sector will make up about half or an unprecedented 49% of gross MGS+GII vs. the 5-year average of 40% while the weighted average tenor could lengthen to c.14 years from 13 years.

Despite a step-up in long duration supply, the house believes the overall supply demand profile at the long-end remains manageable, because: First, the total DV01 supply should be little changed YoY due to lower total MGS+GII issuances. Second, the increase in ultra-long bond is not significant after accounting for private placements (PP). Assuming an unchanged 40% take up, i.e. MYR1.8b PP amount for MYR4.5b average issuance size based on our estimate, it projects a net increase in ultra-long bond supply by MYR3.6b YoY, which should be digestible by the market. Third, the design of auction calendar is typically a result of consultation, potentially reflecting higher demand for durations. Overall, the house does not expect this to cause significant pressures on the long-end although some steepening is possible if UST weakness persists and currently the 10y20y and 10y30y curves are slightly flat versus their 1-year means.

Maybank noted on New Benchmarks: 1) MGS: Both 15y MGS 4/39 and 20y MGS 5/44 will retain their benchmark status in 2025 while the rest will be replaced by reopenings or new issues. The existing 10y 7/34 will still remain as benchmark bond for about another six months until the new issue of MGS 7/35 in June which has been scheduled as the last auction for the month. First auction of the year is MGS 7/32 reopening, which will replace MGS 4/31 as the 7y benchmark bond. 2) GII: Almost the entire curve will see new benchmarks either via reopened bonds or new issues with the exception of 7y GII 10/31 which will retain its benchmark status in 2025.

There will be five new issues compared with only two new issues in 2024 and are the most since 2019 after the shift to having more re-openings to improve secondary liquidity. The 10y GII new issue will come in April. A new initiative is the use of Khadamat structure in the 30y GII 9/55 auction which could increase the appeal of GII to global sukuk investors.
Quarterly and Monthly Supply Profile: Issuances are expected to be fairly evenly distributed across 1H25 and 2H25 totaling MYR82.5b and MYR81.5b respectively. But net supply is heavier in the first half with about 82% of total as maturities are back-loaded in Aug-Oct.

On quarterly basis, Maybank IB estimates net MGS+GII supply of MYR28.3b, MYR37.5b, MYR7.7b and MYR7b from 1Q25 to 4Q25 (Figure 10).