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Danareksa Debt Research Weekly Report, 26 Mart 2019 : Inversion of the US Treasury Yield Curve
March 26, 2019 10:37 WIB

Inversion of the US Treasury Yield Curve

Keeping interest rates unchanged
On Thursday, 21 March, Jerome Powell said that US interest rates would be kept unchanged for some time because global interest rates weighed on the economic outlook and inflation. According to a survey conducted by Bloomberg, economists believe that the Fed’s interest rate will not be raised this year, and some economists even see that there is a chance that the Fed will cut interest rates this year or early next year. In addition, the US recorded its biggest monthly budget deficit in February 2019 amid a 20% reduction in corporate tax revenues and a boost in spending in the current fiscal year. The deficit widened to $ 234 billion in February.

Meanwhile, at the Bank Indonesia Board of Governors’ Meeting held on 20 and 21 March 2019 it was decided to keep the BI 7D RRR at 6%. This decision was made in an effort to improve external stability, specifically to keep the current account deficit within safe limits and maintain the attractiveness of domestic financial assets. Interest and exchange rate policies remain focused on ensuring external stability given that global economic growth has slowed while uncertainty in the financial markets has declined.

The yield curve of US Treasuries is inverted
As a result of the dovish signal given by the Fed, US Treasury yields experienced a significant decline. The US 10-year Treasury registered a decline of 15bps from 2.59% on 15 March 2019 to 2.44% on 22 March 2019, thus causing US Treasury yields to be inverted for the first time since 2007. On 27 August 2007, the 10-year US Treasury yields stood at 4.6% while the 3-month US Treasury yield stood at 4.63% with the Fed Funds Rate at 5.25%. On Friday, 22 March 2019, the 3-month US Treasury yield stood at 2.46%, while the 10-year US Treasury yield was 2.44% with the Fed Funds Rate standing at 2.5%.

Indonesian government bond yields moved down significantly
The 10-year Indonesian Government bond (BTMM ID) yield moved in line with the decline in 10-yr US Treasury yields over the past week. As of 22 March 2019, the yield of 10-year Indonesian Government bonds was at the level of 7.61%, or down by 16bps compared to the previous week’s closing.

Meanwhile, as of 22 March 2019, the 5-year Indonesian CDS was at 104bps while the 10-year was at 177bps, or slightly up compared to the previous week’s closing level of 98bps (5-year CDS) and 175bps (CDS 10- year).

Foreign ownership increased further
Foreign ownership of tradable SBN continued to increase last week. As of 22 March 2019, foreign ownership was recorded at IDR956.72 trillion or an increase of IDR14.05 trillion compared to 15 March 2019. Compared to the end of 2018, foreign ownership is up by IDR63.47 trillion. Meanwhile, the proportion of foreign ownership of total tradable SBN as of 22 March 2019 increased to 38.55%.

Government bonds auction
In the first quarter of 2019, the Government’s auction target is IDR185 trillion. As of 19 March 2019, bond issuances through auctions reached IDR195.67 trillion or exceeding the issuance target for the first quarter. Another auction will be held on 26 March 2019 for SUN.

Based on data released by DJPPR, until 20 March 2019, the issuances of Government bonds amounted to 34.40% of what is needed in 2019 or amounting to IDR284.07 trillion from IDR825.70 trillion needed. Of the new issuances, 67.68% or IDR192.26 trillion are conventional bonds while the remaining IDR91.42 trillion are sukuk.

The Government conducted its latest auction on 19 March 2019 for the SBSN series, namely SPNS20092019, PBS014, PBS019, PBS021, PBS022, and PBS015. At the auction, the amount of incoming bids reached IDR29.70 trillion or higher than in the previous SBSN auction on 5 March 2019 (IDR23.18 trillion). The largest amount of incoming bids was for the PBS014 series (IDR13.91 trillion), followed by SPNS20092019 (IDR7.67 trillion). Meanwhile, the total amount of winning bids was IDR8.98 trillion or slightly higher than in the previous SBSN auction when the amount of winning bids reached IDR8.90 trillion. The largest amount of winning bids was for the PBS014 series (IDR4.8 trillion), followed by SPNS20092019 (IDR1.40 trillion), PBS015 (IDR1.32 trillion), PBS019 (IDR0.18 trillion), and PBS022 (IDR0.03 trillion).

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Danareksa Debt Research Weekly Report, 19 Mar 2019 : Surpassing the Target
March 19, 2019 16:30 WIB

Surpassing the Target

The rupiah strengthened after weakening in two straight weeks
Last week, the rupiah strengthened relative to the US Dollar after weakening in two consecutive weeks. As of 15 March 2019, the rupiah/US Dollar exchange rate stood at IDR14,260 per USD, or strengthening by 0.38% from the previous week’s closing level of IDR14,314 per USD. The volatility (as measured by the daily average of the spread between the highest and lowest levels of the exchange rate) decreased slightly to 45 points from 48 points in the previous week.

Indonesian government bond yields fell significantly
The 10-yr US Treasury yield declined last week. From 2.62% as of 8 March 2019, the 10-yr US Treasury yield declined to 2.59% as of 15 March 2019, its lowest level since 3 January 2019.

Meanwhile, the 10-yr Indonesian government bond yield (BTMM ID) moved in line with the declining 10-yr US Treasury yield last week. As of 15 March 2019, the 10-yr Indonesian government bond yield stood at 7.77%, or down by 20bps over the week. Over the week, the 10-yr Indonesian CDS stood at 176bps or declined by 9bps.

Slightly lower foreign ownership
Foreign ownership of tradable IDR SBN declined last week. As of 14 March 2019, foreign ownership was recorded at IDR940.4 trillion or down by IDR2.35 trillion compared to the position as of 8 March 2019. The proportion of foreign ownership of the total tradable SBN stood at 38.03%.

Auction results
The Government conducted its latest auction on 12 March 2019 for the SUN series, namely SPN03190613, SPN12200313, FR0077, FR0078, FR0068, FR0079, and FR0076. At the auction, the amount of incoming bids reached IDR58.31 trillion or lower than in the previous SUN auction on 5 March 2019 (IDR93.93 trillion). The largest amount of incoming bids was for the FR0078 series (IDR19.43 trillion), followed by FR0077 (IDR16.06 trillion). This was different from the previous SUN auction when the amount of incoming bids for 5-yr tenors was more than the amount for 10-yr tenors. Meanwhile, the total amount of winning bids was IDR18.05 trillion or lower than in the previous SUN auction when the amount of winning bids reached IDR22 trillion. The amount of winning bids has declined as the issuance target for the first quarter of 2019 has been reached. The largest amount of winning bids was for the FR0078 series (IDR5.8 trillion), followed by FR0068 (IDR3.05 trillion), FR0079 (IDR2.05 trillion), the SPN and FR0077 series (IDR2 trillion each), and FR0076 (IDR1.15 trillion).

In the first quarter of 2019, the Government’s auction target is IDR185 trillion. As of 12 March 2019, bond issuances through auctions reached IDR186.69 trillion or exceeding the issuance target for the first quarter. Another 2 auctions will be held in March 2019, that is on 19 March 2019 for SBSN and on 26 March 2020 for SUN.

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Danareksa Debt Research Weekly Report, 05 Mart 2019 : Strong Inflow from Foreign Investor
March 05, 2019 14:31 WIB

Strong Inflow from Foreign Investor

The rupiah weakened slightly last week

The rupiah weakened relative to the USD last week by 0.44% from IDR14,058 per USD on 22 February 2019 to IDR14,120 per USD on 1 March 2019. The volatility (as measured by the daily average of the spread between the highest and lowest levels of the exchange rate) increased slightly. It climbed to 38 points from 32 points in the previous week.

Indonesian Government bond yields fell last week whereas US Treasury yields rose
The 10-yr US Treasury yield went up last week by 11bps from 2.65% on 22 February 2019 to 2.76% on 1 March 2019. By contrast, the 10-yr Indonesian government bond yield declined last week. As of 1 March 2019, the 10-yr Indonesian government bond yield stood at 7.85%, or down by 9bps over the week. During February 2019, the 10-yr US Treasury yield increased by 10bps whereas the 10-yr Indonesian government bond yield fell by 20bps. Meanwhile, the 10-yr Indonesian CDS declined by 8bps during February 2019.

Foreign ownership rose significantly
Foreign ownership in IDR tradable SBN rose further. As of 1 March 2019, foreign ownership was recorded at IDR945.7 trillion or an increase of IDR14.08 trillion compared to 22 February 2019. Therefore, the increase of foreign ownership compare to the beginning of the year was IDR52.45 trillion. The proportion of foreign ownership of total SBN traded stood at 38.03%.

Lower corporate bond issuances at the beginning of 2019
Year to date (ytd) February 2019, corporate bond issuances amounted to IDR12.81 trillion. By issuer, financial institutions issued the largest amount of corporate bonds amounting to IDR7.40 trillion. In second place was the energy sector which accounted for the issuance of IDR3.26 trillion of corporate bonds. Then came the telecommunications sector (IDR1.22 trillion of bond issuances) and the property and real estate, Building Construction, and other sectors (IDR0.54 trillion, IDR0.15 trillion and IDR0.15 trillion of bond issuances, respectively).

The amount of corporate bonds outstanding rose to IDR421.33 trillion in 2019 from IDR401.35 trillion in 2018. In the secondary market, the transaction size in February rose to IDR9.49 billion in 2019 from IDR8.39 billion in 2018.

Auction results
The Government conducted its latest auction on 26 February 2019 for the SUN series, namely SPN03190527, SPN12200213, FR0077, FR0078, FR0068, and FR0079. At the auction, the amount of incoming bids reached IDR93.93 trillion or higher than in the previous SUN auction on 12 February 2019 (IDR66.36 trillion). The largest amount of incoming bids was for the FR0077 series (IDR39.72 trillion), followed by FR0078 (IDR22.55 trillion). Meanwhile, the total amount of winning bids was IDR22 trillion or lower than in the previous SUN auction when winning bids reached IDR25 trillion. The largest amount of winning bids was for the FR0078 series (IDR6.35 trillion), followed by FR0068 (IDR5.10 trillion), FR0079 (IDR4.90 trillion), the SPN series (IDR2 trillion each). Nonetheless, winning bids for the FR0077 series only reached IDR1.65 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%