BNIS Fixed Income Daily Report of May 23, 2021 – BNI Sekuritas
 In Riset

BNIS Fixed Income Daily Report of May 23, 2021.


Bond Market Review (Friday,5/20)

Indonesia’s local currency bond prices advanced on last week’s final trading day. The 5-year benchmark SUN yield (FR0090) was closed at 6.55%(-10bp), while the 10-year benchmark SUN yield (FR0091) was recorded at 7.23%(-6bp).

The outright trading volume of Government securities was recorded at IDR14.1 trillion on Friday, increasing from Thursday’s trading volume of IDR12.6 trillion. FR0091 and FR0070 are the most actively traded series in the secondary market, with the trading volume of IDR1.8 trillion and IDR1.3 trillion, respectively. Meanwhile, the outright trading volume of corporate bonds was recorded at IDR748.8 billion.

The Rupiah exchange rate against the US Dollar strengthened to the level of IDR14,642/USD from the close on Thursday at the level of IDR14,719/USD.


Bond Market Preview (Monday,5/23)

Finance Minister Sri Mulyani Indrawati targets Indonesia’s economic growth to lie in the range of around 5.3% to 5.9% in 2023 while taking into account various risks and potential for national economic recovery. Indrawati later explained that the 2023 KEM and PPFK were prepared on the basis of conditions in the country that was entering the transition phase to an endemic period. The target growth is based on macroeconomic indicators assumptions that include next year’s inflation in the range of 2%-4%, Rupiah exchange rate of IDR14,300-IDR14,800 per US dollar, and the 10-year SUN yield of around 7.34%-9.16%. The other indicators are the price of Indonesian crude oil at USD80-USD100 per barrel, oil lifting at 619 thousand to 680 thousand barrels per day, and gas lifting at 1.02 million to 1.11 million barrels of oil per day.

US Treasury yield curve shifted downward last week, especially for longer tenor bonds. Yield on UST 2-year declined 1bp to 2.60% while the 10-year UST recorded a yield decline of 15bp to 2.78% level at the end of last week.

The 10-year SUN yield (GIDN10YR) ended last week at 7.26% or 13bp lower compared to the previous week. The SUN yield decrease is in line with the yield on 10-year US Treasury which also recorded a weekly decline.

For the period 23 May – 27 May 2022, we estimate the yield on 10-year SUN will be in the range of 7.19% – 7.33%.

Taking into account current market conditions and yield curve valuation, we estimate that FR0070, FR0077, FR0044, FR0090, FR0042, FR0047, FR0085, FR0074, FR0068, FR0072, FR0045, FR0093, FR0075, FR0050, and FR0079 will be attractive to investors.


Indonesia Bond Market News


PEFINDO rating agency has affirmed its idAA- rating for PT Kimia Farma Tbk (KAEF). The outlook for the corporate rating has been revised to stable from negative, reflecting PEFINDO’s expectation of an improving credit matrix, particularly its capital structure and cash flow protection measures in the near to medium term, as a combined result of KAEF’s EBITDA growth acceleration and lower debt level. At the same time, PEFINDO also affirmed the idAA- rating to its Medium-Term Notes (MTN) I/2019 and the idAA-(sy) rating to MTN I/2019 Syariah Mudharabah that will mature on July 10, 2022. KAEF will repay the maturing MTNs of total IDR500 billion using its internal cash and/or existing bank loan facility. As of December 31, 2021, it had cash and cash equivalents of IDR748.5 billion. The corporate rating reflects KAEF’s strategic role in providing certain medicines for the nation, its strong market position in the pharmaceutical industry, and integrated business operations. However, the corporate rating is constrained by its high financial leverage and weak cash flow protection measures, as well as low profit margins.