Live Chat Software
Berita Dan Riset Terbaru
Weekly Update
Monthly Report, Dec 2017 : The Bond Market Continues to Gain Ground
December 08, 2017 17:18

The Bond Market Continues to Gain Ground

Stable yields
The DGBI tended to move sideways in November. The yield index stood at 6.42% on October 30th, dipping to its lowest level of 6.20% on November 9th before peaking at 6.55% on November 16th. The yield index ended the month at 6.42% as of November 30th. YTD, the yield is down by 149bps from 7.92% on the end of 2016. This resulted in a 15.53% ytd return on Government bonds, higher than last year’s return of 12.24% during the same period. As of November 30th, total outstanding government bonds amounted to IDR2,115.07 trillion, with foreign ownership amounting to 39.28% or IDR830.81 trillion. Banks hold IDR 579.41 trillion of government bonds (excluding BI reverse repo), representing 27.39% of the total outstanding.

The target is fulfilled
As the Government, has fully achieved its issuance target for 2017, it cancelled the auctions planned for December. As of November 22nd, total gross government issuances reached IDR708.94 trillion, with the total incoming bids amounting to IDR1,664.47 trillion. Net issuances for 2017 were targeted at IDR432.96 trillion based on the 2017 revised budget, whereas the realization reached IDR453.51 trillion or 104.75% of the budget target.

The Government issued 3 new securities for 2018 pre-funding in December, with tenors of 5 years, 10 years, and 30 years. Total issuances for the 5 year tenor amounted to USD1 billion with a coupon of 2.95%. Total issuances for the 10 year tenor amounted to USD1.25 billion with a coupon of 3.50%. And total issuances for the 30 year tenor amounted to USD1.75 billion with a coupon of 4.35%. By comparison, the prefunding issued last year was lower at USD3.5 billion. This comprised of USD750 million for the 5 year tenor, USD1.25 billion for the 10 year tenor, and USD1.5 billion for the 30 year tenor. The coupons this year were lower since last year’s 5 year tenor had a coupon of 3.7%, the 10 year had a coupon of 4.35%, and the 30 year had a coupon of 5.25%. The lower coupons this year reflect Indonesia’s upgrade to investment grade rating from S&P in the second quarter.

Corporate bonds issuance soars
As of the end of November, total corporate bond issuances in 2017 reached IDR145.34 trillion, exceeding our forecast of IDR118 trillion for 2017. Some 34.61% of total issuances came from the banking sector or amounting to IDR50.31 trillion. The largest issuer in the banking sector was BBRI (IDR10.25 trillion), followed by BEXI and BMRI (IDR8.44 trillion and IDR6 trillion respectively). In 2016, total issuances of corporate bonds reached only IDR113.26 trillion. By sector, the largest issuer last year was the banking sector (IDR51.96 trillion), accounting for 45.88% of the total issuances. In second place were financial institutions (IDR36.49 trillion), accounting for 32.22% of total issuances.