3Q20 Prime SUN Auction Oversubscribed 3x. DJPPR recorded incoming SUN auction requests worth IDR 61.16 trillion, and successfully won IDR 22 trillion. Investors are still quite optimistic, as seen from incoming requests exceeding the indicative target, or record oversubscribed as much as 3x. Meanwhile, the government won all fixed rate series, namely FR0081, FR0082, FR0080, FR0083, and FR0076 in this 3Q20 prime SUN auction. The most popular reference series for investors is the FR0081 series, which reached IDR 25.1 trillion. Then followed by FR0082 worth IDR 15.5 trillion. For the record, this SUN auction is influenced by the tension of the trade war between the US and China which is getting worse and also the recession that occurred in Singapore. Investors are also still waiting for the release of the trade balance data for the June period. Market players’ optimism in the June trade balance will be better than the previous month. The projected trade balance surplus is driven by a decline in imports that exceeds the decline in exports, due to the still low manufacturing activity in Indonesia. While the decline in exports, is still happening in line with the low global manufacturing activity. For the record, almost all of Indonesia’s trading partner countries are still under indications of expansion.

Garuda Indonesia Conversion Bond IDR 8.5 Trillion. Garuda Indonesia Tbk (GIAA IJ) proposes government bailout in the form of the issuance of Mandatory Convertible Bond (MCB) or IDR 8.5 trillion in Mandatory Convertible Bonds. The mandatory convertible bonds will be issued with a tenor of 3 years, and are expected to be liquid in 2020. Conversion bonds are simply bonds that can be converted into shares of a bond issuing company. Previously, Garuda Indonesia also successfully restructured global sukuk worth USD 500 million or equivalent to IDR 7.5 trillion (assuming an exchange rate of IDR 15,000/USD). The debt, which was due in June, was finally extended until June 3, 2023. (CNBC Indonesia)

Cigarette Excise Payments are Loosen Back. The Directorate General of Customs and Excise provides a delay in payment of cigarette excise stamps, from the original 60 days to 90 days. This provision is contained in the Minister of Finance Regulation (PMK) Number 30/PMK.04/2020 concerning Amendments to PMK Number 57/PMK.04/2017. The regulation applies to orders for excise tapes submitted by manufacturers from April 9 to July 9, 2020. This means that the current postponement of the excise tax payment period has ended. (Kontan)

June Trade Surplus Potentially Lower, along with imports are expected to start increasing compared to the previous month. In today’s trading, market participants are still waiting for the release of trade balance data. It is projected that Indonesia’s trade balance in the June period will still record a surplus despite its lower value. We project that the June 2020 trade surplus will be between USD 1.2 billion and USD 1.4 billion. In the short term, investors can re-examine FR0081 and FR0082, taking advantage of volatility amid waiting for trade balance data and the BI 7-DRRR benchmark interest rate.