Continued Strengthening of the SUN Market. All SUN Benchmarks posted lower yields at the beginning of the week. This selective buying action, amid the lack of domestic sentiment. On the other hand, investors are starting to pay attention to the negative real interest rate formed in July. With inflation in June assumed to reach 4% YoY and BI 7DRRR still at 3.50%, a negative real interest rate is formed. Same as US inflation up to 8.6% YoY, but with FFR only 1.50%-1.75%.

Corporate Bonds
Bussan Auto Finance Issues IDR 100 Billion Bonds. PT Bussan Auto Finance (BAF) will issue sustainable bonds II phase I in 2022 with a value of IDR 100 billion to increase working capital. The bonds are part of the Continuous Public Offering (PUB) of sustainable bonds II which is targeted to raise funds of IDR 3 trillion. The company will issue these bonds in two series. First, series A has a principal amount of Rp 88.5 billion, a fixed interest rate of 4.10% with a 370-day tenor. Furthermore, series B has a principal amount of IDR 11.5 billion with a fixed interest rate of 7% and a 3-year tenor. (Kontan)

Domestic Issue
Indonesia’s Debt Ratio Could Widen to 42%. The government and the Budget Agency of the DPR RI have agreed that next year’s debt ratio could widen to 42.35% of Gross Domestic Product (GDP). The debt ratio is higher than this year’s projection, which is allowed up to 42%. Especially when compared to the realization of 38.88% of GDP until the end of May 2022. (CNN Indonesia)

Investors Pay Attention to External Data. Apart from being inclined to wait and see ahead of the release of inflation data in June, which is projected to reach 4% YoY on Friday, investors are keeping an eye on US manufacturing data. Data for May showed an increase in the Core Cap. Good Orders 0.5% (Vs. Surv. 0.2%); Core Cap. Good Shipments 0.8% (Vs. Surv. 0.2%); and Durable Goods Orders 0.7% (Vs. Surv. 0.1%). This performance far exceeded market expectations, following the 150 bps FFR hike during 1H22, indicating that the manufacturing sector is strong enough to hold higher interest rates again in 3Q22.

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