Bond Market Review (Thursday,04/24)

Government Debt Securities (SUN) prices closed mixed in yesterday’s trading session. Based on data from PHEI, the yield on the 5-year SUN benchmark (FR0104) rose by 1 basis point (bp) to 6.65%, while the yield on the 10-year SUN benchmark (FR0103) remained unchanged at 6.94%. Bloomberg data showed that the 10-year SUN yield curve (GIDN10YR) fell by 1bp to the level of 6.95%. The current 10-year yield curve remains in line with our estimated weekly range of 6.85% – 7.13%.

The outright transaction volume of Government Securities (SBN) stood at Rp17.1 trillion yesterday, lower than the previous day’s volume of Rp18.9 trillion. FR0103 and FR0104 were the two most actively traded series in the secondary market, with transaction volumes of Rp4.5 trillion and Rp2.3 trillion, respectively. Meanwhile, corporate bond volume amounted to Rp2.1 trillion.

Bloomberg data showed that the Rupiah exchange rate against the US Dollar weakened slightly by 0.01%, moving from Rp16,872/US$ on Wednesday to Rp16,873/US$ yesterday.

Bond Market Preview (Friday,04/25)

Global indicators reflected a positive sentiment for the bond market, as seen in the decline in US Treasury (UST) yields. The 5-year UST yield curve fell by 9bp to 3.91%, and the 10-year UST yield curve declined by 8bp to 4.32%. Meanwhile, Indonesia’s 5-year Credit Default Swap (CDS) fell slightly by 1bp, indicating a gradual improvement in investor risk perception toward Indonesia.

Considering the market conditions discussed above, we see the potential for increased demand for Rupiah-denominated SBN instruments. Based on the yield curve valuation, we estimate that the following bonds will be attractive to investors: FR0094, FR0088, FR0058, and FR0074.