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Weekly Update
Danareksa Weekly Report, 09 Jan 2018 : Higher Optimism
January 10, 2018 07:36

High incoming bids in the first auction in 2018
The Government of Indonesia has selected the government bond benchmarks for 2018, namely: FR0063 (5-year), FR0064 (10-year), FR0065 (15-year), and FR0075 (20-year). Through the first auction in 2018 held on 3 January 2018, the auction of SPN03180404, SPN12190104, FR0063, FR0064, and FR0075 recorded incoming bids of IDR 86,208,400,000,000 (eighty six trillion two hundred and eight billion million rupiah). The incoming bids reached the highest amount. Meanwhile, the winning bids reached IDR25,500,000,000,000 (twenty five trillion five hundred billion rupiah). The bid to cover ratio for each series reached 2.74x and 2.68x for SPN03180404 and SPN12190104, respectively, while the bid to cover ratio for FR0063, FR0064, and FR0075 was 5.37x; 3.34x; and 3.17x, respectively.

Decline in Govt bond yields in the beginning of the year
On 19 December 2017, Fitch upgraded Indonesia’s Long-Term Foreign- and Local-Currency Issuer Default Rating (IDRs) from BBB- to BBB with a stable outlook. This upgrade reflects Indonesia’s ability to better withstand external shocks and the improving macroeconomic stability. Based on the Danareksa Govt Bond Yield Index, the yield on Indonesian Government Bonds declined by 18bps from 6.22% to 6.04% in the period from 29 December 2017 to 5 January 2018. Meanwhile, the 5-year CDS dropped to 79bps in the same period.

Foreign investors were net buyers
In line with the declining Govt Bonds yield, total foreign holdings of Indonesian Govt Bonds also increased. As of 5 January 2018, total foreign holdings grew by IDR12.81 trillion to IDR848.96 trillion compare to closing at the previous week. The proportion of foreign ownership to the amount outstanding reached 40.3%, up 0.5% compare to 29 December 2017. The proportion reached the highest level since 28 September 2017. The total amount outstanding as of 5 January 2018 stood at IDR2,106.60 trillion or up IDR6.83 trillion from IDR2,009.77 trillion in the previous week.