BNIS Fixed Income Daily Report of May 24, 2021.
Bond Market Review (Monday,5/23)
Indonesia’s local currency bond prices posted another gain early this week. The 5-year benchmark SUN yield (FR0090) was closed at 6.22%(-33bp), while the 10-year benchmark SUN yield (FR0091) was recorded at 7.16%(-4bp).
The outright trading volume of Government securities was recorded at IDR12.2 trillion yesterday, lower than Friday’s trading volume of IDR14.1 trillion. FR0082 and FR0091 are the most actively traded series in the secondary market, with the trading volume of IDR966.8 billion and IDR925.6 billion, respectively. Meanwhile, the outright trading volume of corporate bonds was recorded at IDR681.9 billion.
The Rupiah exchange rate against the US Dollar strengthened to the level of IDR14,672/USD from the close on Friday at the level of IDR14,642/USD.
Bond Market Preview (Tue,5/24)
As of April 2022, Indonesian Government State Budget recorded IDR103.1 trillion of surplus or 0.58% of GDP. The 4M22 budget surplus was a significant improvement compared to 4M21 where state budget recorded a deficit of IDR138.2 trillion or 0.81% of GDP. The budget surplus was supported by the 45.9% increase in Government revenues, amounting to IDR853.6 trillion.
US Treasury yield curve shifted upward compared to its level at the end of last week. UST 2-year yield curve climbed 5bp to 2.65% while the UST 10-year rose 8bp to 2.86%. Based on the CME Group FedWatch Tool, there is 88.4% of probability that the Fed will raise the FFR by 50bp in the next FOMC Meeting.
Indonesia’s 5-year CDS was recorded at 126bp yesterday afternoon, 20bp higher than its position at the end of last week. Compared to the end of 2021, the 5-year CDS has increased by 51bp.
The 10-year SUN yield curve (GIDN10YR) was recorded at 7.20%, still within our estimated weekly range of 7.19% – 7.33%. Taking into account current market conditions and yield curve valuation, we estimate that FR0070, FR0077, FR0040, FR0047, FR0085, FR0091, FR0068, FR0072, FR0045, FR0093, FR0075, FR0050, FR0079 will be attractive to investors.
Indonesia Bond Market News
PT Bank Pembangunan Daerah Jawa Barat Dan Banten Tbk offers a coupon up to 8.60% for the issuance of Shelf Registration Subordinated Bond III Bank BJB Phase II 2022 amounting to IDR1.0 trillion. The bonds will be issued in two series i.e., the 5-year series A with a coupon of 7.85% will be issued as much as IDR399.91 billion and the 7-year series B with a coupon of 8.60% will be issued as much as IDR600.09 billion. This issuance is a part of Shelf Registration Bond III with a total issuance target of IDR2.0 trillion. PEFINDO rating agency has assigned the rating of idA+ for the company’s bonds. The public offering period will be held on June 2-3, 2022, while the electronic distribution and IDX listing will be conducted on June 8 and 9, 2022, respectively.