Biden Effect Encourages Sukuk Auction. The election of Joe Biden as the new president of the United States (US), creates new hopes for the market. Investor project that global market conditions will be more conducive than the Trump administration. In addition, the completion of this US presidential election will reduce the level of global volatility. This has led investors to gradually return to emerging markets, particularly Indonesia. Yesterday, the total bid for Sukuk auction was valued at IDR 22.6 trillion. The highest entry bid was in the PBS028 series valued at IDR 8 trillion, with a weighted average yield of 7.31% and a nominal value of IDR 4.4 trillion. NHKSI Research sees domestic investors such as pension funds interested in this 26-year long tenor because it offers high yields. The next series is the 4-year short tenor PBS026, with an incoming bid of IDR 5.4 trillion. The weighted average yield of PBS026 was at 5.12% with a nominal value of IDR 1.6 trillion won. Meanwhile, the total nominal won from the sukuk auction this time is IDR 10 trillion.

IFC Ready to Buy Adi Sarana Convertible Bonds. Adi Sarana Armada Tbk (ASSA) is preparing to raise funds of up to IDR 450 billion through a limited public offering by issuing convertible bonds. A member of the World Bank, the International Finance Corporation (IFC), is the standby buyer of this corporate action. Adi Sarana will offer up to 600 million convertible bonds that can be exchanged for new shares. The Company sets the exercise price for the conversion into new shares of IDR 750 per bond. The Indonesian Securities Rating Agency (Pefindo) has assigned an A- rating for this convertible bond. For the record, each holder of the company’s 453 old shares registered on January 7, 2021 is entitled to receive 80 new pre-emptive rights (HMETD). Each Rights issue entitles the holder to purchase one convertible bond. (Investor Daily)

Gold Prices Rise, Gold Foreign Exchange Reserves Come Up. After being eroded by USD 1.8 billion in September 2020, October 2020 foreign exchange reserves (cadev) fell again. Bank Indonesia (BI) said that the position of cadev in October 2020 was USD 133.7 billion, or decreased by USD 1.5 billion from the position at the end of September 2020 which was USD 135.2 billion. In the midst of a decline in foreign exchange reserves, the foreign exchange component of gold actually increased. Judging from BI’s Special Data Dissemination Standard (SDDS) data, the gold component in foreign exchange reserves in October 2020 was recorded at USD 4.82 billion or an increase of 0.76% mom from September 2020 which amounted to USD 4.79 billion. This increase was more due to an increase in gold prices throughout October 2020. Meanwhile in the future, the component that will support Cadev is still not a component of gold reserves. On the other hand, the components that support gold reserves will be more liquid components. (Kontan)

Pfizer Vaccine Effect Positive Sentiment. NHKSI Research projects that the successful end-stage clinical trials of the Covid-19 vaccine from Pfizer and BioNTech will be a positive sentiment for global financial markets. Investors are paying close attention to this vaccine, which is claimed to be up to 90% potent and without dangerous side effects. This news makes life expectancy back to normal. Meanwhile, business activity increased again, which then prompted the economy to rise. This has led to emerging market risk assets such as Government Securities (SBN) to strengthen again. On the other hand, investors are still anticipating profit taking in line with the strengthening of the rupiah exchange rate in the past week. Yesterday, the rupiah closed slightly higher by 0.05% to IDR 14,058 / USD on the spot market. Meanwhile, BI’s middle rate strengthened 1.1% to IDR 14,015 / USD. Investors can take advantage of short-term volatility, take a look at the FR0082, FR0080, and FR0087.

-REVIEW (Nov. 10, 2020)-
FR0081 (5yr): +6.9 Bps to 104.71 (5.32%)
FR0082 (10yr): +7.0 Bps to 105.39 (6.25%)
FR0080 (15yr): +9.6 Bps to 106.19 (6.82%)
FR0083 (20yr): +8.2 Bps to 103.29 (7.18%)

FR0086 (6yr): +5.1 Bps to 100.77 (5.33%)
FR0087 (11yr): +6.9 Bps to 101.40 (6.31%)

UST 2yr: +0.009 point to 0.18%
UST 5yr: +0.026 point to 0.45%
UST 10yr: +0.037 point to 0.96%
UST 30yr: +0.032 point to 1.74%
German Bund 10yr: +0.025 point to -0.48%
UK Gilt 10yr: +0.029 point to 0.40%

CDS 2yr: -4.37% to 28.61
CDS 5yr: -7.88% to 72.39
CDS 10yr: -3.53% to 134.56

WTI: +2.65% to USD41.36/Barrel
BRENT: +3.85% to USD43.61/Barrel
Source: Bloomberg