In Riset

Dear Clients,

Please find attached our BNIS Fixed Income Daily Report of October 9, 2019.



Bond Market Review (Tue, 8/10)

Another sideways movement took place on Indonesia’s bond market yesterday. The government bond yields movement were mixed ranging between 1 – 2 bps along the curve, in which, the 10-year Government bond yield inched up 1 bps to 7.23%. The IDR was closed at IDR14,162/USD yesterday, relatively unchanged compared to the previous day’s closing level of IDR14,163/USD.


The outright trading volume of Government securities reached IDR16.4 trillion yesterday, higher than year-to-date average daily trading volume of IDR14.0 trillion. Increasing government securities trading volume was triggered by successful yesterday’s Government bond auction. FR0082 and FR0081 were the two most actively-traded series in secondary market, with the trading volume of IDR6.0 trillion and IDR3.6 trillion, respectively. Meanwhile, the outright trading volume of corporate bond was recorded at IDR1.6 trillion yesterday.


Bond Market Preview (Wed, 9/10)

Indonesia’s bond yields are expected to continue its sideways trend in near term along with the mixed catalyst from external and domestic. The US – China trade tension increased after US expanded its trade blacklist, barring 28 Chinese entities from buying US products and placed visa restrictions on Chinese officials linked to the Muslim abuses. The increasing trade tension between the two countries also spurred investors to enter the safe-haven assets and stay away from the riskier assets, which can be spotted from declining the 2-year, 10-year, and 30-year US Treasury yields to 1.42% (-4 bps), 1.53% (-3 bps), and 2.03% (-2 bps), respectively, which was also followed by the weakening US stock market last night (Dow Jones -1,19%; S&P 500 -1,56%; Nasdaq -1,67%). Those sentiments are also expected to affect on Indonesia’s bond market, curbing the possibility of declining bond yields. However, on the flip side, the likelihood of significant increase on Indonesia’s bond yields may be curbed by the attractiveness of domestic bond market which can be spotted from widening yield spread between Indonesia and US bond yields. The more attractive return on Indonesia’s bond market may also increase investors’ appetite to the domestic bond market. The strong investors’ appetite to the Indonesia’s bond market also can be seen from robust investors’ demand on yesterday’s bond auction, in which total investors’ bid reached IDR48.0 trillion, higher than average investors’ bid on the five previous bond auctions of only IDR35.5 trillion.


Along with the potential of sideways market movement in near term, then, the short-term trading strategy on several Government bonds  such as FR0077, FR0081, FR0078, FR0082, FR0068, FR0080, and FR0079 may still attractive to become investors choice.



Indonesia Bond Market News


Indonesia Government has successfully issued IDR23,6 trillion of bonds through yesterday’s bond auction. Total investors’ bid on this auction reached IDR48,01 trillion, higher than average investors’ bid on the five previous bond auctions of IDR35.54 trillion. This was indicating that investors’ appetite to Indonesia’s bond market remains strong despite higher global market volatility and uncertainty. Along with robust investors’ demand, the Government managed to issue bonds higher than its indicative target which was set at IDR15.0 trillion. Following yesterday’s bond auction, year-to-date, Government has successfully issued IDR759.23 trillion of securities or about 90.19% of 2019 securities issuance target.


PEFINDO has affirmed the rating of idA for PT Bank Pembangunan Daerah Sumatra Barat (Bank Nagari) and its outstanding Bond VII 2015.PEFINDO has also affirmed its idA(sy) rating for the Bank’s outstanding Sukuk Mudharabah II 2015. The outlook for the corporate rating is stable. According to PEFINDO, the rating reflects Bank Nagari’s captive market in West Sumatra province, high margin business from the consumer loan segment, and very strong capitalization. However, the rating is still constrained by its high non-performing loans (NPL) from the productive segment, below average operating efficiency, and tightening competition in the productive loan segment. PEFINDO also stated that the rating may be upgraded if Bank Nagari significantly strengthens its market share on a consistent basis. This should be followed by an improvement in its funding profile, asset quality indicators, and profitability measures. On the flip side, the rating may be lowered if there is a further decline in its asset quality indicators and profitability measures.