In Riset

Dear Clients,

Please find attached our BNIS Fixed Income Daily Report of July 1, 2020.

Bond Market Review (Tue, 30/6)

Indonesia’s bond prices moved in a volatile pattern yesterday along with higher global volatility. The government bond yields movements were mixed ranging between 1 – 5 bps along the curve, in which, the 10-year Government bond yield inched lower 1 bps to 7.19%. The IDR weakened slightly to IDR14,265/USD yesterday, compared to Monday’s closing level of IDR14,245/USD.

The outright trading volume of Government securities was recorded at IDR16.0 trillion yesterday, increasing from Monday’s trading volume of IDR21.0 trillion, but higher than the average daily trading volume during June of IDR13.4 trillion. FR0081 and FR0082 were the two most actively-traded series in the secondary market, with the trading volume of IDR3.0 trillion and IDR2.1 trillion, respectively. Meanwhile, the outright trading volume of corporate bonds was recorded at IDR1.2 trillion yesterday.

Bond Market Preview (Wed, 1/7)

Indonesia’s bond yields are expected to move sideways in a narrow range amid mixed external catalysts. The global investors’ optimism persisted after the US Treasury Secretary, Steve Mnuchin, said that he is working with the House and the Senate to pass more coronavirus relief by the end of July. However, on the flip side, the Fed Chairman, Jerome Powell, said that despite a recent uptick in economic activity, yet, the outlook is extraordinarily uncertain and will rely on both containing the virus and government support for the recovery. The US stock market advanced on the 2Q20’s final trading day, in which Dow Jones, S&P 500, and Nasdaq were closed +0,85%; +1,54%; and 1,87%. Meanwhile, the 10-year US Treasury yield climbed 3 bps to 0.66% last night. The global optimism may become a positive catalyst which will limit the potential of increasing Indonesia’s bond yields in the near term. Additionally, the robust investors’ liquidity, which can be spotted from solid investors’ participation in yesterday’s bond auction with total incoming bids reaching IDR72.0 trillion, is also expected to add a positive catalyst to the market. However, the likelihood of significant decline on Indonesia’s bond yields may be curbed by the uncertainty on the global economic prospect amid increasing coronavirus cases globally.

Along with the potential of sideways market movement in the near term, then, short-term trading strategy on Government bonds such as FR0070, FR0077, FR0081, FR0082, FR0073, FR0054, FR0058, FR0074, FR0080, and FR0083 may remain attractive for investors.

Indonesia Bond Market News

Indonesia Government has successfully issued IDR20.5 trillion of bonds through yesterday’s bond auction. Total investors’ bid on yesterday’s auction reached IDR72.0 trillion, declining from the previous bond auction of IDR84.8 trillion, yet, remained higher than average bid on the eight previous bond auctions of IDR62.4 trillion, indicating that investors’ appetite for the Government bond market remains strong along with robust investors’ liquidity despite higher global market volatility. Along with the higher investors’ participation, the Government managed to issue bonds higher than its indicative target of IDR20.0 trillion. Following yesterday’s bond auction, year-to-date, the Government has successfully issued IDR652.7 trillion of Government securities.

PT Aneka Gas Industri Tbk. will issue Shelf Registration Bond II Phase I 2020 and Shelf Registration Sukuk Ijarah II Phase I 2020 totaling to IDR190.0 billion, respectively. The bonds and sukuk will be issued in three series, i.e., the 3-year series A with the indicative coupon of 9.20% – 9.80%, the 5-year series B with the indicative coupon of 9.85% – 10.55%, and the 7-year series C with the indicative coupon of 10.55% – 11.25%. This bond and sukuk issuance is part of Shelf Registration bond II and Shelf Registration Sukuk Ijarah II with the total issuance target of IDR500.0 billion and IDR1.0 trillion, respectively. Fitch Ratings Indonesia has assigned the A-(idn) rating for these bonds and sukuk. The company will use the proceeds from this bond and sukuk issuance to repay its debt and the company’s working capital. The bookbuilding period will be held until July 14, 2020. The public offering period will be held on July 27 – 29, 2020, while the electronic distribution and IDX listing will be conducted on August 4 and 5, 2020, respectively.

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