Rising MGS yield to impact IOIPG, Genting and YTL's net profits – BIMB Research
KUALA LUMPUR: Net profit of IOI Properties Group Bhd, Genting Bhd and YTL Corp Bhd is expected to be affected by rising Malaysian Government Securities (MGS) yields, with the impact estimated up to two per cent, said BIMB Research.
The Malaysian Government Securities (MGS) yields have been rising, which could negatively impact the net profits of IOI Properties Group, Genting, and YTL Corp, according to BIMB Research. Of these three companies, IOI Properties is expected to be the most affected, with a 10-basis-point increase in borrowing costs potentially reducing its 2026 net profit by up to 1.96 percent.
Genting and YTL Corp would see a 0.93 percent and 0.73 percent reduction in net profit, respectively. The report indicates that the higher-for-longer interest rate environment could lead to tighter credit conditions for companies dealing with floating-rate debt, high refinancing requirements, and large maturities. IOI Properties has a significant floating-rate exposure, with about 87 percent of its debt tied to floating rates.
The report estimates that a 10-basis-point increase in borrowing costs would raise IOI Properties' annual cash interest costs by around RM23 million, leading to a RM13.2 million impact on its net profit. The higher-yield environment is driven by a surge in corporate borrowing, with non-financial corporate bond and sukuk issuances reaching a record RM216 billion over the past year.
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