Please find attached our BNIS Fixed Income Daily Report of November 7, 2019.
Bond Market Review (Wed, 6/11)
Indonesia’s bond prices declined yesterday. Most of the government bond yields increased by about 1-3 bps along the curve, in which, the 10-year Government bond yield climbed 3 bps to 6.96%. The IDR weakened to IDR14,023/USD yesterday, compared to Tuesday’s closing level of IDR13,969 /USD.
The outright trading volume of Government securities was recorded at IDR13.3 trillion yesterday, decreasing from the previous day’s trading volume of IDR17.5 trillion, and lower than the year-to-date average daily trading volume of IDR13.9 trillion. FR0082 and FR0053 were the two most actively-traded series in secondary market, with the trading volume of IDR2.3 trillion and IDR1.0 trillion, respectively. Meanwhile, the outright trading volume of corporate bond was recorded at IDR1.7 trillion yesterday.
Bond Market Preview (Thu, 7/11)
Indonesia’s bond prices are expected to extend its downside movement in near term amid raising external pressures. Along with the lack of economic data release which could significantly impact to the market, the market participants’ focus turned to US – China trade relations. The uncertainty on the US – China trade deal increased after report said that Presidents from both countries will not meet to sign a trade deal until December. The meeting between Donald Trump and Xi Jinping could be delayed as the two countries still need to decide on the terms and a venue. This sentiment spurred investors to enter the safe-haven assets, which can be spotted from declining the 2-year, 10-year, and 30-year US Treasury yields to reach 1.61% (-2 bps), 1.83% (-3 bps), and 2.32% (-2 bps),respectively, last night. On the flip side, the US stock market were mixed in a narrow range (Dow Jones 0.00%; S&P +0.07%; Nasdaq -0.29%). Increasing external pressures may also open a room for further market correction in Indonesia’s bond market in near term. The upside market trend during the last three months is also expected to curb further significant market strengthening amid lack of catalyst in near term. However, the likelihood of significant increased on Indonesia’s bond yields are likely to be limited by subdued and manageable inflation as well as lower supply Government securities issuance at the end of this year.
Along with the potential of further market correction in near term, then, the short-end and the belly series of Government bonds such as FR0070, FR0077, FR0081, FR0059, FR0064, and FR0071 can be an alternative choice for investors.
Indonesia Bond Market News
PEFINDO rating gency has affirmed the rating of idAAA to Perusahaan Listrik Negara’s Bond XI 2010 Series B and the rating of idAAA(sy) to PLN’s Sukuk Ijarah IV 2010 Series B. The IDR1.783 trillion of bonds and the IDR167.0 billion of sukuk will mature on January 12, 2020. The Company plans to pay its maturing bond and sukuk using its internal fund. As of June 30, 2019, PLN had cash and cash equivalent of IDR32.9 trillion. Perusahaan Perseroan (Persero) PT Perusahaan Listrik Negara is a wholly owned state company engage in the generation, transmission, and distribution of electricity throughout the country.
PT Bank MUFG has successfully issued Negotiable Certificates of Deposit (NCD), namely, NCD IV MUFG Bank Phase V 2019 totaling to IDR1.11 trillion. The NCD was issued in four series i.e., the 3-month A series with a coupon of 5.65% was issued as much as IDR180.0 billion, the 6-month B series with a coupon of 5.85% was issued as much as IDR230.0 billion, the 12-month C series with a coupon of 6.10% was issued as much as IDR650.0 billion, and the 3-month D series with a coupon of 5.75% was sold worth of IDR50.0 billion. Following this issuance, year-to-date, the NCD issuance has reached IDR16.8 trillion, higher than the same period last year of IDR9.9 trillion.