In Riset

Dear Clients,

Please find attached our BNIS Fixed Income Daily Report of June 13, 2019.


Bond Market Review (Wed, 12/6)


Indonesia’s bond prices increased slightly yesterday, after experienced a significant hike in the previous 3 trading days. Most of the government yields closed lower in the range between 1-5 bps along the curve, in which the 10-year government bond yield inched lower 1 bps to 7.69%. The IDR weakened to IDR14,241/USD yesterday, compared to previous day’s closing level of IDR14,239 /USD.


A limited price strengthening is also followed by easing investors’ activity in secondary market, in which the outright trading volume of Government securities only recorded at IDR9.8 trillion yesterday, decreasing from the Tuesday’s trading volume of IDR18.0 trillion, and also far lower compared to the year-to-date average daily trading volume of IDR14.4 trillion. FR0078 and FR0068 were the two most actively-traded series in secondary market, with the trading volume of IDR2.3 trillion and IDR1.1 trillion, respectively. Meanwhile, the outright trading volume of corporate bonds was recorded at IDR885.9 billion yesterday.


Bond Market Preview (Thu, 13/6)


Indonesia’s bond yields are expected to move sideways in a narrow range amid mixed sentiments from external and domestic. Global market participants’ worries over the trade relationship between the US and China persist, after both countries are predicted to not reach an agreement in the near term. Market participants will then focus on the G20 summit which will be held in Japan at month-end. Those sentiments reduced investors’ risk appetite, which can be spotted from the weakening US and European stock markets last night (Dow Jones -0,17%; FTSE100 -0,42%; DAX -0.33%). This also may curb the potency of foreign find flow to enter Indonesia’s bond market. Meanwhile, global investors’ expectation on the potential of Fed Fund Rate cut increased, after the release of US inflationary data for the period of May 2019 which recorded at 0.1% MoM, and 1.8% YoY, lower than the previous figures of 0.3% MoM and 2.0% YoY. This also can be spotted from the increasing Fed rate cut probability in July 2019 to 82.3%, compared to the previous level of 78.3%. From domestic, the potency for profit taking is still high, after a significant hike in the previous 4 trading days. Moreover, the market participants are also expected to stand on the side lines ahead of the next week’s Government bond auction. These mixed catalysts may curb the potency for a significant yield movement in near term in Indonesia’s bond market.

Along with the potential of sideways market movement in near term, then, short-term trading strategy on several Government bonds such as FR0077, FR0078, FR0068, and FR0079 may become an attractive option for investors.


Economics and Indonesia Bond Market News


PEFINDO has affirmed its idA ratings for PT Permodalan Nasional Madani (Persero) (PNM) and its outstanding Shelf Registration Bond I/2014, Shelf Registration Bond II/2017, Shelf Registration Bond III/2019, Medium-Term Notes (MTN) XVII/2018 and MTN 2018. PEFINDO has also affirmed its idA(sy) ratings for PNM’s Sukuk Mudharabah I/2017 and Sukuk Mudharabah II/2018. The outlook for the corporate rating is stable. The rating may be raised if PNM increases its market position significantly, along with improvements in asset quality and operating efficiency. The rating could also be raised if there is material evidence of stronger support from the government. The rating could be  lowered  if  there  is  a  significant  deterioration  in  its  asset  quality  performance,  weaker  capitalization  profile, or  a  significant reduction in government support. PNM is a financial institution that provides loans and technical assistance to micro, small, and medium-sized enterprises (MSMEs), as well as cooperatives.


PT Bank Negara Indonesia (Persero) (BBNI) plans to issue negotiable certificate of deposit (NCD) totaling up to IDR1.0 trillion. The NCD will be sold in 4 series; in which Series A has a tenor of 3 months, Series B has a tenor of 6 months, Series C has a tenor of 9 months, and Series D has a tenor of 12 months. Bookbuilding period is expected to be held on June 10-24, 2019. Following the issuance of BBNI NCD, year-to-date, total issuance will reach IDR7.8 trillion. Going forward, we predict that the NCD issuance will be higher, supported by the potential issuances from refinancing motives on maturing NCD which reached IDR7.3 trillion until the end of this year.


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