The government will hold another conventional bond auction today (18-Feb), targeting Rp33tn, with a maximum issuance of Rp49.5tn, unchanged from the previous auction. The offerings will consist of three SPN series (1-mo, 3-mo, and 1-yr tenors) and six fixed-rate SUN reopenings, i.e., FR109 (5.1-yr), FR108 (10.2-yr), FR106 (14.5-yr), FR107 (19.5-yr), FR102 (28.4-yr), and FR105 (38.4-yr). Based on our incoming bids model, we expect the total demand to moderate to around Rp65tn (range: Rp60tn 70tn). The softer outlook reflects slightly tighter liquidity conditions, marginally higher bond yields compared to the previous auction, and a weaker rupiah against the USD ahead of the auction.
Demand moderated, foreign participation improved. At the 3-Feb conventional bond auction, demand remained solid albeit softer. The total incoming bids reached Rp76.6tn (vs. Rp82.9tn prior; YTD avg.: Rp83.5tn), within our forecast range of Rp67tn 77tn. The moderation was primarily driven by weaker onshore participation, while foreign demand rebounded meaningfully. Foreign bids rose to Rp8.4tn (10.9% of total bids), up 116% from the previous auction. However, the foreign awarded-to-bid ratio eased to 33% (vs. 41.5% prior). Onshore investors remained dominant, submitting Rp68.2tn (89.1% of total bids; vs. Rp79tn prior).
By series, demand was concentrated in the 5.1-yr FR109 at Rp25.4tn (33.2% of total bids), followed by the 10.2-yr FR108 at Rp20.6tn (26.9%), the 14.5-yr FR106 at Rp6.9tn (9.1%), and the 1-yr SPN at Rp6.9tn (9.0%). Notably, SPN demand continued to decline from Rp32.8tn on 6-Jan and Rp31.6tn on 20-Jan to below Rp12tn on 3-Feb likely reflecting the higher frequency of SRBI auctions. In contrast, demand for longer-tenor fixed-rate (FR) series strengthened to Rp64.6tn (vs. Rp51.3tn on 20-Jan).
The government maintained its issuance at Rp36tn, above the Rp33tn target. The weighted average cost of funds increased to 5.98% (vs. 5.79% prior), while the average tenor extended to 12.08 years (vs. 11.46 years). Year-to-date, the gross issuance has reached Rp234.5tn, equivalent to nearly 15% of the FY2026 state budget (APBN) financing target.
YTD, onshore banks have been the largest type of net buyer in secondary markets. Including primary and secondary market transactions, onshore banks remained the largest net buyers of conventional bonds, accumulating Rp41.6tn. They were followed by insurance and pension funds (+Rp33.3tn), other investors (+Rp23.5tn), mutual funds (+Rp12.1tn), Bank Indonesia (+Rp5.0tn), and foreign investors (+Rp3.1tn). Meanwhile, only retail investors were reported as net sellers, recording -Rp2.5tn, based on the bond fund flow data from the Debt Management Office (settlement date: 11-Feb-2026).
Expecting moderating demand. Based on our incoming bids model, we estimate the total demand at today s bond auction to moderate to around Rp60tn 70tn. While slightly below the previous auction s Rp76.6tn, demand would still comfortably exceed the government s Rp33tn issuance target. Bank Indonesia s latest liquidity projection stands at Rp59.5tn as of 13-Feb (unchanged from the previous auction). Additional liquidity support will come from bond maturities of Rp1.75tn this week, along with coupon payments totaling Rp1.4tn.
We forecast the fair yields for the bond series to be auctioned today as follows: 4.48% (range: 4.43-4.53%) for the 1-mo SPN, 4.51% (range: 4.46-4.56%) for the 3-mo SPN, 4.98% (range: 4.93-5.03%) for the 1-yr SPN, 5.70% (range: 5.65-5.75%) for the 5.1-yr FR109, 6.35% (range: 6.30-6.40%) for the 10.2-yr FR108, 6.62% (range: 6.57-6.67%) for the 14.5-yr FR106, 6.66% (range: 6.61-6.71%) for the 19.5-yr FR107, 6.75% (range: 6.70-6.80%) for the 28.4-yr FR102, and 6.80% (range: 6.75-6.85%) for the 38.4-yr FR105.
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