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Danareksa Weekly Report, 20 Nov 2017 : Government Bond Supply is Running Low
November 20, 2017 17:25 WIB

India’s Rating is Upgraded
Moody’s upgraded India’s rating from Baa3 to Baa2 on 16 November 2017 – the first time India has been upgraded since 2004. The upgrade reflects Moody’s view that continued progress on economic and institutional reforms in India will enhance India’s high growth potential and its financing base for government debt. The move is expected to gradually reduce the Indian government’s debt burden in general. Last week, India’s 10-year yield curve increased 8bps from 7.06% to 7.14%.

Foreign Investors were Net Buyers
The Danareksa Govt Bonds Yield Index declined slightly by 2bps last week from 6.21% to 6.18%. The decline followed an increase in foreign holdings of Government bonds. As of 16 November 2017, foreign holdings were recorded at IDR816 trillion or up by IDR4 trillion from the previous week. During November, foreign net buying reached IDR19.18 trillion after the net selling of IDR23.2 trillion in October. The decline in bond yields last week did not come as a surprise given that there is a limited supply of government bonds towards the year-end. According to the schedule, there are only 3 auctions remaining (including this week’s auction) before the end of the year.

Top 10 Most Traded Corporate Bonds in 2017
As of 17 Nov 2017, the total trading in corporate bonds reached IDR203.9 trillion with total frequency of 22,199 trades during 2017. Federal International Finance (FIFA) has been this year’s most traded bond with total trading reaching IDR12 trillion (6.3% of the total trading) with an average trade of IDR16.16 billion. Lembaga Pembiayaan Ekspor Indonesia (BEXI) was the second-most traded bond with total trading reaching IDR10.5 trillion (5.15% of the total trading) with an average trade of IDR12.21 billion.

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Danareksa Weekly Report, 07 Nov 2017 : Running Like a Clockwork
November 08, 2017 10:17 WIB

Running Like a Clockwork

Government bonds yield declined throughout last week as Jerome Powell was elected as the next chairman of The Fed. Powell will replace Janet Yellen whose term of office will officially end on the 1st of February 2018. Danareksa Government Bond Yield Index dropped by 15bps from 6.45% to 6.30%, erasing previous week’s lost by recording a total return of 1.24% in the past week. Furthermore, US Treasury yield also dropped from 2.42% to 2.34% during the same period.

As of 2 November 2017, total issuance of Government bonds (gross) reached IDR677.1 trillion or 94.3% of the total needs of IDR717.8 trillion. Therefore, the Government requires an additional IDR40.7 trillion within the next 5 auctions (including this week auction) in order to fulfill its issuance target. Realizing said amount is expected to maintain the supply of bonds in a safe level until the end of 2017 considering the average absorption of SUN and SBSN auction in the last 10 auctions were IDR18.8 trillion and IDR6 trillion.

Lower secondary activities
During Last week, the volume of secondary market transactions for Government bonds amounted to IDR69.2 trillion, or down by IDR14.5 trillion compared to the previous week. On the other hand, secondary market transactions in corporate bonds also declined, which was down by IDR4 trillion from IDR8.77 trillion to IDR4.77 trillion.

Flattening yield curve
Yield slope of Government bonds decreased, indicating a flattening yield curve last week. 2-year yield curve climbed 14bps last week. Meanwhile, 10-year yield curve dropped 19bps to 6.64%. Therefore, yield slope – yield spread between 10- and 2- year tenor-- closed at 53bps last week or down by 32bps from the its previous week position of 85bps.

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Danareksa Weekly Report, 31 Oct 2017 : Another Weekly Loss
November 01, 2017 16:44 WIB

The Danareksa Gov’t Bonds Yield index rose by 17bps last week from 6.28% to 6.45%. As such, it recorded a loss of 1.1%. However, the total return year-to-date of Government bonds as of 27 October 2017 was 12.5%, yet lower than the total return in the same period in 2016 of 18.1%. The increase in the yield last week stems from depreciation of the rupiah, as the dollar strengthened in response to global issues such as Mario Draghi’s speech about tapering and the election of the Fed’s new chairman which will be decided this week.

Currency risk premium increased as the Rupiah weakened against the US Dollar
The Sovereign Risk Premium, the yield spread of the 10-year USD Indonesia over the 10-year UST, moved sideways last week. Indonesia’s 10-year CDS reached 158bps on 24 October 2017, its lowest level since July 2007. However, the currency risk premium, the yield spread of the USD over the 10-year Indonesia IDR, rose by 14bps over the past week due to the depreciation of the rupiah amounting to 0.67% from IDR13,519 per USD to IDR13,609 per USD.

Foreign investors cut their holdings in IDR tradable Gov’t bonds
Other factors which may have pushed up yields last week include net selling of foreign holdings of Government bonds. As of 27 October 2017, foreign holdings stood at IDR805.1 trillion (38.8%) or down by IDR4.2 trillion from the level at the end of last week of IDR809.4 trillion (39.2%). Meanwhile, outstanding bonds which were used by Bank Indonesia in monetary operations (Reverse Repo BI) dropped by IDR42.1 trillion from IDR177.6 trillion to IDR135.4 trillion. By contrast, BI holdings grew by IDR41.1 trillion from IDR8.3 trillion to IDR49.4 trillion in the same period.

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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%