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Weekly Update
Danareksa Weekly Report 2018, 20 Maret 2018 : First Positive Weekly Return since January 2018
March 21, 2018 08:07

Declining yields led to a higher weekly return
The yield on government bonds declined last week. This was reflected in the Danareksa Government Bonds Yield Index which dropped 13bps from 6.51% on 9 March 2018 to 6.38% on 16 March 2018. This resulted in a weekly return of 1% compared to -0.92% in the previous week. Last week, foreign investors were net buyers of government bonds. Indeed, foreign holdings increased from IDR826.30 trillion on 13 March to IDR837.96 trillion on 16 March 2018 (accounting for 39.04% of the total outstanding amount of IDR2,146 trillion). Earlier on 9 March 2018, foreign holdings of government bonds stood at IDR830.92 trillion. Thus, over the week, the increase of foreign holdings of government bonds reached IDR7.04 trillion. In the US, meanwhile, the 10-year US Treasury yield remained below the 2.9% level, ending the week at 2.85%.

Investors start to prefer medium tenors as well as short tenors
The last SBN auction was held on 13 Mar 2018 for the following series: SPN03180614, SPN12190314, FR0063, FR0064, FR0075, and FR0076. Total incoming bids at the last auction reached IDR46.47 trillion or up from IDR41.1 trillion in the previous auction on 27 Feb 2018. More specifically, the largest amount of incoming bids were for FR0064, reaching IDR17.07 trillion. This differs from several previous auctions, in which investors’ preference was only for short-tenors. The latest auction indicates that investors are more confident in bonds with longer-tenors. From the total indicative target of IDR17 trillion, the total winning bids at the auction reached IDR23.45 trillion. The most winning bids were for FR0064 which reached IDR7.8 trillion, followed by the SPN series with IDR5 trillion each. Furthermore, the budget realization of Government Securities (net) was recorded at IDR115 trillion or 27.76% of the total budget for 2018 (IDR414.5 trillion) as of 14 March 2018.

The auction will be held again on 20 Mar 2018 for the following series: SPNS07092018, PBS016, PBS002, PBS017, PBS012, and PBS004. The total indicative target for this auction is IDR8 trillion.