The Government Securities (SUN) market closed mixed after Joe Biden officially became President of the United States (US). The market movement yesterday was also amidst the decision of Bank Indonesia (BI) to maintain its benchmark interest rate. Prices for short-tenor SUN were recorded, indicating a number of investors are more comfortable investing in short-tenor bonds than in medium and long-term assets. Market players also responded to BI’s decision to maintain the benchmark interest rate at 3.75%, and also gave an outlook for 2021. BI projects Indonesia’s Gross Domestic Product (GDP) in 2021 in the range of 4.8% -5.8%; Current Account Deficit (CAD) is estimated at 1.2% of GDP in 2021; inflation forecast for 2021 is in the range of 2% -4%; reduction in bank lending rates is projected to continue in 2021; BI is still buying Government Securities (SBN) in the primary market in 2021 as a form of Burden Sharing; and BI continues the accommodative macroprudential policy.

PTPP Plans IDR 2 Trillion Bond Issuance. PT PP (Persero) Tbk (PTPP) will issue bonds to refinance the company’s debt securities which will mature this year. Currently, the company is processing new bond issuances of approximately IDR 2 trillion. Based on data from the Indonesian Central Securities Depository, the PTPP bonds will mature on July 6, 2021, namely PTPP Phase I Continuous Bonds II 2018 Series A worth IDR 1.04 trillion. For the record, PTPP has budgeted capital expenditure of IDR 6.2 trillion this year with 37% of which will be used for toll road development projects. (Bisnis Indonesia)

Bank Indonesia Maintains BI 7-DRRR at 3.75%. Bank Indonesia (BI) held the BI 7 Day Reverse Repo Rate (BI 7-DRRR) at the level of 3.75% at the BI Board of Governors Meeting January 2021. The central bank also held the deposit facility rate at 3% and the interest rate lending facility by 4.5%. This decision is consistent with the predicted low inflation, maintained external stability, and in the framework of joint efforts to support national economic recovery. BI also continues to strengthen the national economic recovery through five policy steps. First, opening up productive sectors. Second, the acceleration of fiscal stimulus by the government. Third, bank lending from the demand and supply side. Fourth, monetary and macroprudential stimuli that have been rolled out. Fifth, the acceleration of economic and financial digitization, particularly the development of MSMEs. (Kontan)

Investors are Anticipating BI’s Decision. This weekend, the SUN market has the opportunity to vary with the potential to strengthen the rupiah exchange rate. The extension of the implementation of restrictions on community activities (PPKM) for Java-Bali until February 8, has become a domestic sentiment for the weekend. The extension of the PPKM could hamper the pace of Indonesia’s economic recovery, giving negative sentiment to the domestic market. On the other hand, the immediate disbursement of the USD 1.9 trillion fiscal stimulus after the Democrat Party controlled the DPR and the US Senate gave positive sentiment for strengthening the rupiah exchange rate.