In Riset

Dear Clients,

Please find attached our BNIS Fixed Income Daily Report of November 8, 2019.



Bond Market Review (Thu, 7/11)

Indonesia’s bond prices moved sideways in a narrow range yesterday. The government bond yield movements were mixed ranging between 1-5 bps along the curve, in which, the 10-year Government bond yield increased slightly 2 bps to 6.98%. The IDR strengthened to IDR13,998/USD yesterday, compared to Wednesday’s closing level of IDR14,023/USD.


The outright trading volume of Government securities was recorded at IDR12.4 trillion yesterday, decreasing from the previous day’s trading volume of IDR13.3 trillion, and lower than the year-to-date average daily trading volume of IDR13.8 trillion. FR0068 and FR0077 were the two most actively-traded series in secondary market, with the trading volume of IDR1.3 trillion and IDR1.2 trillion, respectively. Meanwhile, the outright trading volume of corporate bond was recorded at IDR849.1 billion yesterday.



Bond Market Preview (Fri, 8/11)

After declining on the last two days, Indonesia’s bond prices are expected to strengthen on the final trading day of this week. Given the lack of global economic releases, Investors turned their focus on the US – China trade progress. The market participants are more sanguine after the world’s two largest economies reportedly agreed to remove existing import tariffs. Gao Feng, a China Commerce Ministry’s spokeperson, said that US and China had agreed to simultaneously cancel some existing import tariffs. The ministry spokesperson also said that the two countries were closer to a phase one trade agreement following constructive negotiations over the past two weeks. Those sentiments spurred the market participants to be in full risk-on mode, and reducing demand of safe-haven assets, which can be spotted from the strengthening US stock market last night (Dow Jones +0.66%, S&P 500 +0.27%, Nasdaq +0.28%), which was also followed by increasing the 2-year, 10-year, and 30-year US Treasury yields to 1.67% (+6 bps), 1.92% (+9 bps), and 2.40% (+8 bps). The raising global investors’ optimism may also become a positive catalyst which will open a room for Indonesia’s bond market strengthening in near term. Additionally, the potential of market strengthening will also be supported by the stable IDR movement along with higher Indonesia’s foreign reserve.


Along with the potential of market strengthening in near term, then, several Government bonds such as FR0081, FR0082, FR0080, and FR0083 may be more attractive to become investors choice.



Indonesia Bond Market News


Indonesia’s foreign reserve was recorded at USD126.7 billion at the end of October 2019, higher than September 2019’s level of USD124.3 billion. This foreign reserve was equivalent to finance 7.4 months of imports or about 7.1 months imports and servicing Government external debt. The increasing official reserve assets in October 2019 was mainly triggered by the issuance of Global Bonds by Indonesian Government, oil & gas foreign exchange receipts, as well as other foreign exchange receipts. Bank Indonesia sees that this foreign reserve position is able to support the external sector resilience and maintain macroeconomic and financial system sustainability. Going forward, Bank Indonesia also sees that the foreign reserve will remain adequate which will be supported by stability and solid prospect of domestic economy.


PT Perusahaan Pengelola Aset (Persero) has successfully issued Medium Term Notes (MTN) totaling to IDR750.0 billion. The MTN was issued in two series i.e., the 2-year A series with a coupon of 10.05% was issued as much as IDR300.0 billion, and the 3-year B series with a coupon of 10.30% was sold worth of IDR1.37 trillion. Following this issuance, year-to-date, total MTN issuance has reached IDR20.8 trillion. Going forward, we expect the MTN issuance to remain robust along with the potential of further decline on Indonesia’s bond yields, which may also open a room for lower cost of fund to issue corporate debt.