BNIS Fixed Income Daily Report of April 3, 2020.
Bond Market Review (Thu, 2/4)
Indonesia’s bond prices moved in a volatile pattern yesterday amid lingering external pressure. The bond prices had declined on the first trading session, yet, the prices rebounded from its low on the second session. The 10-year Government bond yield (FR0082) was closed at 8.03% yesterday remained higher than previous day’s closing level of 7.91%. The IDR weakened slightly to IDR16,495/USD yesterday, compared to Wednesday’s closing level of IDR16,450 /USD.
The outright trading volume of Government securities was recorded at IDR12.6 trillion yesterday, slightly higher than the previous day’s trading volume of IDR11.6 trillion, but remained lower than the year-to-date average daily trading volume of IDR21.9 trillion. FR0081 and FR0061 were the two most actively-traded series in secondary market yesterday, with the trading volume of IDR2.9 trillion and IDR1.1 trillion. Meanwhile, the outright trading volume of corporate bond was recorded at IDR1.5 trillion yesterday.
Bond Market Preview (Fri, 3/4)
Indonesia’s bond market is expected to extend its volatile movement along with higher global market volatility. The investors’ optimism on the global oil prices increased after the US President, Donald Trump, said Russia and Saudi Arabia would cut its oil production. This sentiment triggered the strengthening US stock market last night, in which the Dow Jones, S&P 500, and Nasdaq indexes climbed +2.24%, +2.28%, and +1.72%, respectively. However, on the flip side, investors’ fears on the coronavirus outbreak persisted as the COVID-19 cases around the world surpassed 1 million on Thursday. Investors’ worries on the negative impact of the coronavirus outbreak also increased along with surging US initial jobless claims to 6.6 million last week, doubling than the previous week of 3.3 million. The mixed external sentiments may extend the volatility on Indonesia’s bond market. However, the Bank Indonesia’s and Government’s steps to maintain market stability as well as minimizing the negative impact of the coronavirus outbreak to the economy may curb the likelihood of significant increase on Indonesia’s bond yields.
As the global market volatility persists, then the short-end and belly series of Government bonds such as FR0053, FR0070, FR0071, FR0081, FR0056, FR0059, FR0064, and FR0071 may remain attractive to become investors choice.
Indonesia Bond Market News
PEFINDO rating agency has affirmed the rating of idAAA for PT Indosat Tbk (ISAT)’s Shelf Registered Bond II Phase I Year 2017 Seri B of IDR628.0 billion and its Shelf Registered Bond I Phase II Year 2015 Seri C of IDR584.0 billion. These bonds will mature on May 31, 2020 and June 4, 2020, respectively. PEFINDO also has affirmed its idAAA(sy) rating for ISAT’s Shelf Registered Sukuk Ijarah I Phase II Year 2015 Seri C of IDR67.0 billion which will mature on June 4, 2020. The company should be able to repay the maturing bond and sukuk using its unused credit facilities from several banks and internal fund. As of December 31, 2019, the company had cash balance of IDR5.9 trillion, while its unused credit facilities as of January 31, 2020 amounted to IDR5.4 trillion from several banks. PT Indosat Tbk (ISAT) is one of the top three telecommunications and information service operators in Indonesia providing cellular; multimedia, internet and data communication (MIDI); and fixed telecommunication services. As of December 31, 2019, it was owned by Ooredoo Asia, Pte Ltd (65%), the Government of Indonesia (14.3%), and the public (20.7%).
PT Perusahaan Listrik Negara (Persero) will issue Shelf Registration Bond III Phase VII 2020 totaling to IDR1.82 trillion. The bond will be issued in the form of 3-year, 5-year, 7-year, and 10-year papers, with an indicative coupon ranging between 7.20% – 9.90%. This issuance is part of Shelf Registration Bond III, with issuance target of IDR16.0 trillion. PEFINDO rating agency has also affirmed its idAAA rating for the bonds. The bookbuilding period will be held on March 31 – April 14, 2020.