SUN Benchmark Mixed Ahead of Auction. Yield inversion still occurs between FR0092 with FR0091 and FR0093. Investors are interested in the long tenor FR0092, anticipating risks in the short term. Earlier in the week, investors again observed the narrowing of BI’s interest rate disparity with the Fed. BI’s Dovish attitude contrasts with global central banks which tend to be Hawkish aggressive, such as the SNB and the BoE, which also raised their benchmark interest rates last week.
Corporate Bonds
Bumi Serpong Damai Bond Tender Offer. PT Bumi Serpong Damai Tbk (BSDE) through its subsidiary, Global Prime Capital Pte. Ltd. (GCP) plans to carry out a tender offer to repurchase part and or all of the senior notes. The bonds are denominated in United States Dollars (USD) of USD 270 million with 5% interest maturing in 2023, which have been issued by GPC and guaranteed by Bumi Serpong Damai and several subsidiaries. (Liputan6.com)
Domestic Issue
Carbon Tax Targeting Consumers. The government has sent a signal that it will implement a carbon tax starting July 1, 2022. The first stage of implementing the carbon tax will target the coal-fired power plant (PLTU) sector with a tax scheme based on emission limits (cap and tax). In more detail, in the Law on Harmonization of Tax Regulations (UU HPP) Chapter IV, Article 13 Paragraph 5 of the HPP Law, it is stated that the subject of carbon tax is an individual or entity that buys goods containing CO2 or goods that produce carbon emissions. (Kontan)
Recommendation
Last SUN Auction 2Q22. In addition to New Issues SPN03220921 and SPN12230622, the Government is again offering FR0090, FR0091, FR0093, FR0092, and FR0089 at today’s SUN auction. The indicative target is IDR 20 trillion, and a maximum of IDR 30 trillion. The wait-and-see attitude of investors ahead of the BI RDG results, and the depreciation of the rupiah, colored the demand for SUN auction yields this time. Based on the survey, BI is projected to hold the BI 7DRRR in June at the level of 3.50%; with the rupiah exchange rate depreciating to the level of IDR 14,800/USD.
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