Foreign holdings of Malaysian government bonds rise to record 32%

KUALA LUMPUR (Bloomberg) - Global holdings of Malaysian government bonds rose to a record in April, taking overseas ownership of the debt to 32 per cent.

The figure may add to concern that Malaysia is more vulnerable than its regional counterparts to a global selloff should the Federal Reserve boost interest rates this year. Global funds own about 18 per cent of Thailand's sovereign notes, according to that nation's central bank data.

Foreign investors purchased a net RM11 billion (S$4.07 billion) from a month earlier, the biggest inflow since at least 2006 and bringing the holdings to RM168 billion, according to central bank data.

The figure includes both conventional and Islamic sovereign bonds. When corporate notes are taken into account, they bought a total of RM2.9 billion for an overall RM216.4 billion.

Barclays included Malaysia's Shariah-compliant government bonds in its global aggregate index on March 31, which helped contribute to the overall increase in foreign ownership, said Winson Phoon, a Kuala Lumpur-based fixed-income analyst at Maybank Investment Bank Bhd.

The ringgit strengthened 3.9 per cent in April, the biggest advance among Asia's most-active currencies, amid a 21 per cent surge in Brent crude. That helped bolster the outlook for government finances in a country that derives about 30 per cent of state revenue from oil-related sources.