BNIS Fixed Income Daily Report of July 22, 2021.
Bond Market Review (Wed, 7/21)
Indonesia’s local currency bond prices moved sideways yesterday. The government bond yield movements were mixed ranging between 1 – 2 bps along the curve, in which, the 10-year Government bond yield fell 1 bps to 6.29%. Meanwhile, the USD-denominated bond yields climbed last night, in which INDON-31 and INDON-51 yields were closed at 2.14% (+5 bps) and 3.10% (+11 bps), respectively. The IDR weakened to IDR14,542/USD yesterday, compared to Monday’s closing level of IDR14,518/USD.
The outright trading volume of Government securities was recorded at IDR15.7 trillion yesterday, increasing from Monday’s trading volume of IDR14.3 trillion, and also higher than the month-to-date average daily trading volume of IDR11.9 trillion. FR0091 and FR0087 were the two most actively-traded series in the secondary market, with the trading volume of IDR3.1 trillion and IDR2.7 trillion, respectively. Meanwhile, the outright trading volume of corporate bonds was recorded at IDR497.1 billion yesterday.
Bond Market Preview (Thu, 7/22)
Indonesia’s bond yields are expected to extend its sideways movement in the near term. Global investors’ optimism increased along with better-than-expected earnings reports from Coca-Cola and Johnson & Johnson. This positive sentiment eased investors’ concerns on the higher covi-19 cases in the US. Increasing investors’ optimism also can be spotted from the US stock market strengthening last night (Dow Jones +0.83%; S&P 500 +0.82%; Nasdaq +0.92%), followed by increasing the 10-year and 30-year US Treasury yields to 1.29% (+7 bps) and 1.94% (+6 bps), respectively, indicating that investors moved from safe-haven assets to riskier assets. Easing external pressure is also expected to bring a positive catalyst to Indonesia’s bond market in the near term. The low yield environment in the domestic bond market may also be supported by robust investors’ liquidity, which can be seen from solid investors’ participation in yesterday’s bond auction. Total investor’s bids reached IDR95.55 trillion yesterday, higher than average bids in 13 previous bond auctions of IDR63.58 trillion. However, on the flip side, the likelihood of declining Indonesia’s bond yields may be curbed by increasing covid-19 cases as well as IDR weakening in recent days.
Given the potential sideways market movement in the near term, then, short-term trading strategy may remain attractive to be adopted by market participants. The government bonds such as FR0086, FR0090, FR0071, FR0078, FR0087, FR0091, FR0068, FR0083, and FR0092 will be attractive for trading purposes.
Indonesia Bond Market News
Indonesia Government has successfully issued IDR34.00 trillion of bonds through yesterday’s bond auction, slightly higher than its indicative target of IDR33.0 trillion. Total investor’s bids on yesterday’s auction reached IDR95,55 trillion, increasing from the previous bond auction of IDR83.40 trillion, and also higher than average investor’s bids in 13 previous bond auctions of IDR63.58 trillion. Investors’ demand on the FR0090 (6-year), FR0091 (11-year), and FR0091 (21-year) series were strong and reached IDR24.28 trillion, IDR30.82 trillion, and IDR19.87 trillion, respectively. Following yesterday’s bond auction, year-to-date, the Government has successfully issued IDR786.71 trillion of securities.
PT Wahana Ottomitra Multiartha Tbk offers a coupon up to 7.00% for the issuance of Shelf Registration Bond IV WOM Finance Phase I 2021 totaling to IDR500.0 billion. The bonds will be issued in two series i.e., the 370-day series A with a coupon of 5.50% will be issued as much as IDR302.0 billion and the 3-year series B with a coupon of 7.00% will be issued as much as IDR198.0 billion. This issuance is a part of Shelf Registration Bond IV with a total issuance target of IDR5.0 trillion. Fitch Ratings Indonesia has assigned the rating of AA-(idn) for the company’s bonds. The public offering period will be held until July 23, 2021, while the electronic distribution and IDX listing will be conducted on July 28 and 29, 2021, respectively.