The inclusion criteria for the WGBI state that a marketÆs capitalisation must exceed $20 billion dollars, for at least three consecutive months. As of December 2006, the Malaysian Government Bond Index satisfies all three WGBI requirements of size, credit and barriers to entry. Using the new entry rule for WGBI, if Malaysia continues to meet all WGBI criteria for three consecutive months starting with the January 2007 index, it will become the 23rd government bond market to enter the WGBI, effective July 2007.
In joining CitigroupÆs WGBI, Malaysia will join Singapore as the only two Asian countries outside of Japan to enter this global index, which is CitigroupÆs flagship sovereign performance benchmark. CitigroupÆs WGBI, currently includes the sovereign bonds of 22 countries deemed suitable for global investors based on quality, size, pricing and currency.
In June 2005, Citigroup introduced the Malaysian Government Bond Index as part of the Citigroup Asian Government Bond Indexes and it became a WGBI Additional Market in 2006.
"With the Malaysian fixed-income market continuing to play a pivotal role in financing its economy, efforts are being taken by the Malaysian government to further develop the market as an efficient means of allocating and mobilising investment funds," says Sanjeev Nanavati, country head for corporate and investment banking, Citigroup Malaysia. "Initiatives were instituted to further improve liquidity, diversify both issuers and investors, develop benchmark yield curves and enhance its infrastructure.ö
The latest market developments include the issuance of callable Malaysian Government Securities (MGS) and the introduction of a MGS switch auctions in January 2007 to replace previously issued MGS with the current benchmark issues of either the three-, five- or ten-year sector.
ôPassing the strict inclusion criteria to qualify for the WGBI is a compelling signal to global investors that Malaysia is a prime investment target, not only for MGS bonds but for all Malaysia bonds," says Sim S. Lim, managing director and head of Citigroup Asia Pacific emerging markets sales and trading. "This inclusion will lead to the Malaysian bond market attracting high quality and discerning global investors who participate in markets and economies with sound fundamentals and best in class infrastructure. We are convinced about that and also the regulators commitment in continuing to create a conducive environment for building the capital markets further. This should also lead to more liquidity in debt instruments and opportunities for
a diverse set of investors."
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