BNIS Fixed Income Daily Report of January 16, 2020.
Bond Market Review (Wed, 15/1)
Another sideways movement took place on Indonesia’s bond market yesterday along with the mixed external catalysts. The government bond yield movements were mixed ranging between 1 – 3 bps along the curve, while the 10-year Government bond yield inched up 1 bps to 6.85%. The IDR declined slightly and closed at IDR13,695/USD yesterday, compared to Tuesday’s closing level of IDR13,680/USD.
Despite the sideways market movement, yet, the secondary market trading volume was remain robust. This can be spotted from the outright trading volume of Government securities which reached IDR22.7 trillion yesterday. FR0080 and FR0082 were the two most actively-traded series in secondary market, with the trading volume of IDR2.5 trillion and IDR2.4 trillion, respectively. Meanwhile, the outright trading volume of corporate bond was recorded at IDR816.9 billion yesterday.
Bond Market Preview (Thu, 16/1)
Indonesia’s bond prices are expected to strengthen in near term. The global investors’ optimism increased as the US and China signed the phase I trade deal. This trade agreement includes provisions to curb intellectual property theft along with forced technology transfers. In addition, it also increases Chinese purchases of US products. However, the US will leave tariffs on another USD250 billion in Chinese products in place. The US Treasury Secretary said a second phase of the agreement could include more tariff relief. The global market participants were hopeful that the signing of a phase I trade deal between the US and China would help bring a better relations between the two countries. Increasing global investors’ optimism can be spotted from the strengthening US stock market lats night (Dow Jones +0.31%; S&P 500 +0.19%; Nasdaq +0.08%). Those sentiments may also become a positive catalyst which will open a room for market strengthening on Indonesian bonds. The likelihood of declining Indonesia’s bond yields may be also supported by robust market liquidity, in which, year-to-date, the average daily trading volume of Government securities reached IDR19.2 trillion, higher than average daily trading volume in 2019 of only IDR13.6 trillion. Furthermore, the stronger foreign investors’ appetite to the Indonesia’s bond market may also add a positive catalyst in near term. During the first nine trading day in 2020, foreigners have posted a net buy of IDR20.46 trillion in Government securities.
Along with the potential of market strengthening, then, the benchmark bond series i.e., FR0081, FR0082, FR0080, and FR0083 will remain attractive to become investors choice.
Indonesia Bond Market News
Indonesia’s trade balance recorded a deficit of USD28,2 million in December 2019, better than previous month’s deficit of ISD1.39 billion. The December trade deficit was triggered by deficit on oil & gas by UDR971.30 million, despite a USD943.10 million surplus of non-oil and gas. Indonesia’s exports were recorded at USD13.95 billion in December 2019, increased 3.77% compared to the previous month’s figure. The higher exports in December 2019 was underpinned by increasing non-oil & gas exports by 3.10% to reach USD13.31 billion, as well as higher oil & gas exports by 12.09% to reach USD1.16 billion. China, US, and Japan were the main destinations for Indonesia’s non-oil & gas export with the contribution of 38.70% to total non-oil & gas exports in December 2019. On the other side, Indonesia’s imports value was recorded at USD14.50 billion in December 2019, declining by 5.47% compared to the previous month. The declining imports were driven by lower import value both on oil & gas and non-oil & gas imports of USD1.20 million (0.06%) and USD838.00 million (6.35%), respectively. Following last month’s deficit, Indonesia’s trade balance was recorded a deficit of USD3.20 billion in 2019, lower than deficit in 2018 of USD8.70 billion.
PT Sinar Mas Multifinance offers a coupon up to 10.50% for the issuance of Shelf Registration Bond I Phase IV 2020 totaling to IDR400.0 billion. The bonds will be issued in two series i.e., the 370-day A series with a coupon of 9.50% will be issued as much as IDR150.0 billion, and the 3-year B series with a coupon of 10.50% will be issued as much as IDR250.0 billion. This issuance is part of Shelf Registration Bond I with total issuances target of IDR2.0 trillion. Fitch Rating Indonesia has assigned the rating of A-(idn) for the company’s bonds. The public offering period will be held on January 24 – 27, 2020, while the electronic distribution and IDX listing will be conducted on January 30 and 31, 2020 , respectively.