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Danareksa Debt Research Weekly Report, 07 August 2018 : Sluggish Market
August 08, 2018 09:36 WIB

Sluggish Market

Government bond yields moved sideways
The 10-year US Treasury moved sideways last week. It stood at 2.95% on 3 August 2018 or down by 1bp over the week. Commensurately, the Indonesian bond market moved sideways last week. The Danareksa Government Bonds Yield Index stood at 7.31% as of 3 August 2018, little changed over the week. Nonetheless, the level of risk as reflected in the CDS moved slightly upward. On 3 August 2018, the 5 year CDS rose by 9bps to 116bps and the 10 year CDS increased by 7bps to 192bps. Foreign holdings rose by IDR11.27 trillion to IDR847.14 trillion over the week amidst the increasingly stable USD/IDR exchange rate.

Government issuances are above 60% of the target
As of 24 July 2018, Government SBN issuances amounted to IDR500.22 trillion or 60.8% of the total gross issuances needed in 2018 of IDR822.3 trillion. Even though 60% of the target has been reached, realization is lower than in the previous year. Last year, Government SBN issuances reached IDR684.73 trillion as of 1 August 2017 or 71.9% of the total gross issuances needed in 2017 of IDR684.73 trillion.

Lower corporate issuances on a yearly comparison
Corporate issuances from the beginning of the year to July 2018 were down by 15% compared to the same period last year. The issuance of corporate bonds in 2018 amounted to IDR71 trillion, or lower than the IDR84 trillion in 2017. In 2017, the sector to issue the most corporate bonds was the Banking sector (IDR32.9 trillion). However, the amount of bonds issued by this sector in 2018 fell to IDR20.7 trillion placing it second to financial institutions which issued a larger amount of bonds. In 2018, financial institutions issued IDR27.2 trillion of bonds or IDR6.6 trillion more than in the same period last year. From the beginning of 2018 to July 2018, toll roads, airports, ports and allied products and the property and real estate sectors issued IDR3 trillion and IDR665.5 billion of bonds, respectively, while in 2017 there were no issuances in these two sectors in the corresponding period.

Results of the Previous Auction
The government held its latest SUN auction on 31 July 2018 for the SPN03181101, SPN12190801, FR0063, FR0064 and FR0065 series. The total bids received at the latest auction amounted to IDR45.44 trillion, up from IDR38.17 trillion at the previous SUN auction on 17 July 2018. Unlike the previous SUN auction, the largest amount of incoming bids last week were for the SPNS 12 month series which reached IDR14.22 trillion or up from IDR8.65 trillion in the previous SBSN auction. Total awarded bids reached Rp20 trillion or similar to the amount awarded in the previous SUN auction. Details of the auction on 31 July 2018 are shown below.

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Danareksa Debt Research Weekly Report, 17 July 2018 : Anticipating the Next Move
July 18, 2018 10:45 WIB

Anticipating the Next Move

Global Market conditions

US Treasuries moved sideways
The 10-yr US Treasury moved sideways from 2.82% on 6 July 2018 to 2.83% on 13 July 2018. Meanwhile, the 2-yr US Treasury rose by 6bps last week. As such, the spread between the 2-yr and 10-yr UST dropped by 51bps from the end of last year to 24bps. Meanwhile, the price of Brent and WTI oil dropped by 3% to USD74.25 per barrel and 3.8% to USD71.01 per barrel, respectively, over the week. Nonetheless, the price of Brent is still up by 11% (yoy) with the WTI price 18% (yoy) higher.

Indonesia’s bond market
Government bond yields down as reflected in the declining CDS
The Indonesian bond market showed better performance last week, with the Danareksa Government Bonds Yield Index standing at 7.12% as of July 13th, 2018, or down by 16bps over the week. Therefore, as of July 13th, the total ytd return reached -3.15% while the weekly return was 1.11%. On the other hand, the level of risk, as seen on CDS, stood at 119bps (5 years) and 199bps (10 years) as of July 13, 2018.

Calmer Rupiah
Standing at IDR14,375 per USD on 6 July, the rupiah touched a weekly high of IDR14,445 per USD in intraday trading before closing at IDR14,378 per USD on 13th July 2018, a move of 2 points over the week. In terms of volatility, as seen in the spread between the highest and lowest levels of the USD/IDR, the average volatility last week was 39.50 points or down by 23.17 points from 62.67 points in the previous week.

Foreign holdings increased slightly
Total foreign holdings of tradable government bonds increased slightly last week. As of 12th July 2018, foreign holdings grew by IDR3.83 trillion from IDR831.71 trillion on July 6th, 2018 to IDR835.54 trillion. In terms of the proportion, total foreign holdings as of Thursday last week amounted to 37.88% of total traded SBN, or the highest proportion since June 28th, 2018. By comparison, BI’s ownership including Reverse Repo dropped to IDR196.9 trillion on July 12th from IDR198.7 trillion on July 6th.

Changes in the government’s bond issuance target
In terms of the government bond issuances needed for 2018, the target has been changed by the government on multiple occasions. Originally, the government needed to issue IDR856.48 trillion with the amount of maturing bonds and buybacks reaching IDR441.96 trillion. As such, the net issuances needed were estimated at IDR414.52 trillion. The government made its first change on May 23rd when the gross issuance target was changed to IDR841.43 trillion with IDR426.91 trillion of maturing bonds and buybacks. On June 27th, the gross issuance target was reduced again to IDR834.27 trillion with IDR427.05 trillion of maturing bonds and buybacks (implying a net issuance target of IDR407.22 trillion). The most recent change was made on July 11th when the gross issuance target was changed to IDR822.27 trillion with IDR414.79 trillion of maturing bonds and buybacks (implying a net issuance target of IDR407.48 trillion).

Results of the Previous Auction
The government held its latest SBSN auction on July 10 2018 for the SPNS112019, SPNS11042019, PBS016, PBS002, PBS012, and PBS015 series. The total bids at the latest auction amounted to IDR12.54 trillion, up from IDR7.15 trillion at the previous SBSN auction on June 26th, 2018. As in the previous SBSN auction, the largest incoming bids were for the SPNS 6 month series which reached IDR5.08 trillion or slightly down from IDR5.25 trillion in the previous SBSN auction. Total awarded bids reached Rp8 trillion or higher than at the previous SBSN auction when total awarded bids were IDR5.16 trillion. Details of the latest auction are shown below.

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Danareksa Debt Research Weekly Report, 8 May 2018 : Surging CDS
May 08, 2018 17:11 WIB

Surging CDS

Global market conditions
After briefly hitting a high of 3.03% on 25 Apr 2018, the US Treasury yield declined to a level below 3%. As of 7 May 2018, the US Treasury yield stood at 2.95%. Oil prices continued to trend higher. The Brent oil price was recorded at USD 75.47 per barrel, up 2.2% from the previous week. The WTI oil price rose by 3.9% to USD 70.73 per barrel. Meanwhile, the yield spread between the 10-year and 2-year US Treasuries (or yield slope) fell further last week from 47bps to 46bps, resulting in a flatter yield curve.
In terms of the rupiah/US dollar exchange rate, the rupiah weakened further. As of 7 May 2018, the exchange rate was recorded at Rp14,001 per USD or depreciating by 0.77% from the previous week. However, the level of rupiah volatility was lower than in the previous week. The average difference between the highest and lowest rupiah values was 38 points, or down from the previous week’s average of 63 points. Meanwhile, foreign ownership declined by Rp2.92 trillion over the week to Rp845.31 trillion as of May 4, 2018.

Indonesia’s bond market
In Indonesia, the level of risk as reflected in the CDS increased last week. The 5-yr CDS rose by 20bps to 126bps as of 7 May 2018. At the same time, the 10yr CDS jumped by 24bps to 203bps. However, based on the Danareksa Government Yield Index, Government bond yields were only up by 8bps from 6.54% on 27 Apr 2018 to 6.62% on 7 May 2018.

Results of the latest auction
The latest SBSN auction was held on 2 May 2018 for the following series: SPNS03112018, PBS016, PBS002, PBS017, PBS012, PBS004, and PBS015. Total incoming bids at the auction only reached IDR5.53 trillion or down significantly from IDR10.17 trillion at the previous SBSN auction held on 17 Apr 2018. As was the case in the previous SBSN auction, the largest amount of incoming bids at the latest auction were for the SPNS series, reaching IDR3.44 trillion albeit down from IDR4.32 trillion in the previous SBSN auction. From the total indicative target of IDR8 trillion, the total winning bids at the latest SBSN auction only reached IDR1.38 trillion or far lower than at the previous SBSN auction (IDR6.32 trillion). The most winning bids were for SPNS03112018 (IDR0.65 trillion), followed by PBS002, PBS016 and PBS017. However, there were no winning bids for PBS012, PBS004, and PBS015. The next auction will be held on 8 May 2018 for the following series: SPN12180809, SPN12190510, FR0063, FR0065, and FR0075. The total indicative target for this auction is IDR17 trillion with the maximum target of IDR25.5 trillion.

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Weekly Report Oct 2017
Country's FCLT Rating
S & P BBB-
Moody's Baa3
Fitch BBB-

Key Market Editor
BI Rate 4.25%
JCI 5,915.00
IDR 13.52
Inflation Sep 2017(%YoY) 3.72%

Market Outstanding
Government Bond IDR 2,060.70 bn
Corporate Bond IDR 371.60 bn

Last Week Trading Volume
Government Bond IDR 73.32 bn
Corporate Bond IDR 4.85 bn

Government Bond Indices
Price Index 134.87
Yield Index 6.23%
Total Return 557.70

Benchmark Yield
FR0061 5 Year 6.19%
FR0059 10 Year 6.53%
FR0074 15 Year 7.13%
FR0072 20 Year 7.32%