Bond Market Review (Tuesday,03/18)

The downward trend in Government Securities (SUN) prices continued during yesterday’s trading session. Based on data from PHEI, the yield on the 5-year SUN Benchmark (FR0104) rose by 2 basis points to 6.70%, while the yield on the 10-year SUN Benchmark (FR0103) increased by 4 basis points to 7.02%. Bloomberg data showed that the 10-year SUN yield curve (GIDN10YR) rose by 4 basis points to 7.03%. The 10-year SUN yield curve is nearing the upper bound of our estimated weekly range of 6.84%-7.05%.

The outright trading volume of Government Securities (SBN) was recorded at Rp39.5 trillion yesterday, higher than the previous day’s trading volume of Rp13.5 trillion. FR0104 and FR0103 were the two most actively traded series in the secondary market, with transaction volumes of Rp17.1 trillion and Rp10.4 trillion, respectively. Meanwhile, the outright trading volume of corporate bonds was recorded at Rp2.2 trillion.

DJPPR data showed that total incoming bids in yesterday’s SUN auction reached Rp61.8 trillion, lower than the previous SUN auction on March 4, which recorded Rp75.8 trillion. The Government set the total awarded amount of the eight series offered at Rp28 trillion, slightly higher than the indicative target of Rp26 trillion.

In the press release announcing the auction result, Indonesia’s Minister of Finance, Sri Mulyani, stated that tax revenues might improve in March. She also reaffirmed her commitment to managing state finances professionally in her capacity as Finance Minister.

Bloomberg data showed that the Rupiah depreciated by 0.13% against the US Dollar, moving from Rp16,406/US$ on Monday to Rp16,428/US$ on Tuesday. 

Bond Market Preview (Wednesday,03/19)

Global indicators showed mixed sentiment, reflected in the decline in US Treasury (UST) yields alongside an increase in Indonesia’s Credit Default Swap (CDS) level. The 5-year UST yield curve fell by 4 basis points to 4.07%, while the 10-year UST yield curve dropped by 2 basis points to 4.29%. Meanwhile, Indonesia’s 5-year CDS increased by 2 basis points to 85 basis points. Indonesia’s 5-year CDS has climbed 17 basis points since mid-February, reflecting heightened risk perception in the market. Market participants are awaiting the results of the FOMC Meeting, the BoJ Monetary Policy Meeting, and the Bank Indonesia Board of Governors Meeting (RDG BI), which will be announced soon.

Considering the market conditions discussed above, we anticipate increased volatility in the prices and yields of Rupiah-denominated SBN instruments. Based on yield curve valuations, we estimate that the following bonds will be attractive to investors: FR0094, FR0087, FR0091, FR0100, and FR0103.