Bond Market Review (Tuesday,03/25)

The downward trend in Government Bond (SUN) prices continued during yesterday’s trading session. According to data from PHEI, the yield on the 5-year benchmark SUN (FR0104) rose by 3 basis points (bps) to 6.97%, and the yield on the 10-year benchmark SUN (FR0103) increased by 2bps to 7.20%. Bloomberg data showed that the 10-year SUN yield curve (GIDN10YR) rose by 2bps to 7.21%. The current level of the 10-year yield curve remains in line with our estimated range for this week, which is in the 6.97–7.26% band.

The outright transaction volume of Government Securities (SBN) was recorded at Rp26.1 trillion yesterday, higher than the previous day’s volume of Rp21.1 trillion. FR0103 and FR0104 were the two most actively traded series in the secondary market, with transaction volumes of Rp5.5 trillion and Rp5.1 trillion, respectively. Meanwhile, outright trading volume for corporate bonds was recorded at Rp5.4 trillion.

Bloomberg data showed that the Rupiah exchange rate against the US Dollar weakened by 0.27%, moving from Rp16,568/US$ on Monday to Rp16,612/US$ on Tuesday.

Bond Market Preview (Wednesday,03/26)

Global indicators signaled a modest improvement in sentiment, as evidenced by the decline in US Treasury (UST) yields. The UST 5-year yield curve fell by 2bps to 4.07%, and the UST 10-year yield curve dropped by 3bps to 4.31%. Meanwhile, Indonesia’s 5-year Credit Default Swap (CDS) remained unchanged at 92bps.

Considering the market conditions discussed above, we anticipate continued volatility in the prices and yields of Rupiah-denominated Government Securities. Based on yield curve valuation, the following bonds may be attractive to investors: FR0090, FR0104, FR0091, FR0096, FR0065, and FR0103.