PETALING JAYA: The listing of bonds by Petroliam Nasional Bhd (Petronas) and Cagamas MBS Bhd has stirred some excitement on the local bourse although the papers are not allowed to be traded by the public at large.

While trading remains on an over-the-counter basis, their listing marks an initial step towards generating retail awareness on bonds. The companies that choose to list their bonds can also benefit from greater visibility and an improved corporate profile.

Bursa Malaysia’s exempt regime basis, which was implemented in December 2008, allows bonds to be listed on the exchange by both listed and non-listed issuers but these instruments would not be quoted or traded by the public.

There are some non-ringgit denominated bonds issued by Malaysian corporates that are listed in foreign exchanges. However, the ringgit-denominated issues are not open for listing elsewhere.

Last month, Petronas and Cagamas MBS, a wholly-owned subsiadiary of Cagamas Bhd, took up the offer and listed their respective conventional and sukuk bonds.

Petronas’ US$1.5bil sukuk and US$3bil conventional bonds made their debut on Bursa Malaysia and Labuan International Financial Exchange while Cagamas MBS listed on Bursa all the outstanding sukuk and bonds issued under its five residential mortgage-backed securitisation transactions, amounting to RM4bil of sukuk and RM6bil bonds.

Cagamas Bhd president and CEO Steven Choy said the listing increased investor awareness, improved trading liquidity as well as enlarged the investor base for Cagamas debt securities.

“The listing of bonds will encourage good corporate governance via the disclosure of comprehensive corporate information. That will improve investor awareness and increase market confidence,” Choy said in an e-mail reply to StarBiz.

A Petronas spokesman concurred, adding that the listing of its bonds enabled the group to profile its bond and sukuk papers locally.

“It’s a positive move by the regulator as it promotes transparency in the debt capital market. This would help investors and other stakeholders keep up with the developments in the bond market,” he said.

He added that the listing of Petronas bonds also supported efforts by Bank Negara, which recently launched the Emas bonds and sukuk, to promote Malaysia as a hub for Islamic finance.

In fact, there could be more bond listings on the local bourse. Cagamas’ ongoing efforts to increase the visibility of its bonds might involve further listings on Bursa, said Choy.

Cagamas is the second-largest issuer of debt instruments after the Government.

Since its inception in 1986, it has cumulatively issued RM237.1bil conventional and Islamic debt securities.

It has a strong credit rating, being assigned AAA and P1 by RAM Rating Services Bhd and AAA/AAAID and MARC-1/MARC-1ID by Malaysian Rating Corp Bhd.

AmInvestment Bank group director and head of debt capital markets Soo Seohan, who was involved in the Cagamas bond listing exercise, noted that some offshore funds were given the mandate to only invest in listed bonds.

“It’s a matter of choice for the issue to list on Bursa but it’s also a step towards enlarging the range of investment options for high networth and liquid individuals,” he said.

Furthermore, the exempt regime could be the first step towards getting retail investors familiarised with the bond market.

In mature markets like the United States, not all savings went to fixed deposits, pension funds or equities, as some were invested in bonds, Soo pointed out.

In a country with high savings like Malaysia, there was potential for expansion of the bond market to include retail investors, he added.