Bond Market Strengthening amid Rupiah Depreciation. Yesterday, ICBI touched the level of 294.3 or strengthened 7.46% YtD. The current strengthening of the bond market is also driven by the entry of BI in the context of burden sharing policies. On the other hand, the depreciation of the rupiah held back the turmoil of the domestic bond market. Yesterday, the rupiah exchange rate weakened in line with the resumption of high demand for the US dollar. The strengthening US dollar received positive sentiment from US employment data. Meanwhile, domestic sentiment came from the Ministry of Finance’s assistance program for business actors, especially MSMEs. This program provides interest subsidies ranging from 3% to 6%.
Indonesia Infrastructure Finance raises IDR 2 trillion in funds. Indonesia Infrastructure Finance (IIF) plans to raise funds from the rupiah bond market or global bonds in 4Q20. The funds targeted by this finance company are around IDR 1.5 trillion to IDR 2 trillion. IIF President Director Reynaldi Hermansjah said the company is still in discussion with securities regarding funding options, which depend on future conditions. The company tries to find the most optimal cost funding. It is recorded that IIF still has a Sustainable Public Offering I (PUB) program, which leaves a ceiling of IDR 1.5 trillion. The company previously held a phase I offering worth IDR 1.5 trillion in December 2019. At that time, the bonds were offered in three series with coupons ranging from 6.75% -7.9%. The proceeds from the bond issuance are used for infrastructure financing distribution needs. Currently, there are a number of infrastructure projects that the company plans to fund. These projects include a drinking water supply system (SPAM), mini hydro power plant, and infrastructure in the oil and gas sector which are undertaken by a national private company. (Investor Daily)
CAD 2Q20 Narrowing to 1%. BI expects CAD 2Q20 period to narrow below 1.5% of GDP. In fact, BI is also optimistic that CAD throughout 2020 will be in the range of 1.4% to 1.6% of GDP. This BI projection is influenced by the improvement in the trade balance, in line with the decline in imports due to low domestic demand. BPS noted, Indonesia’s trade balance for the 2Q20 period was valued at USD 2.88 billion. This figure is higher than the previous quarter which was valued at USD 2.62 billion. Thus, Indonesia’s trade balance during the 1H20 period reached a value of USD 5.5 billion. On the other hand, Indonesia’s CAD condition still depends on external factors, such as the presence or absence of the Covid-19 pandemic in the upcoming 4Q20 period. (Kontan)
US dollar index strengthening, remains a negative sentiment for the domestic bond market. This external sentiment strengthened in line with high investor interest in US bond yields. The US dollar index is moving on an upward trend with consolidation in the range of 92.45 to 93.96. Other external sentiments, namely the waiting for the US decision regarding further stimulus over the effects of the Covid-19 pandemic, to concerns over trade relations between the US and China, which prompted investors to turn to safer investment instruments. Yesterday, the rupiah exchange rate weakened 0.6% to IDR 14,760 / USD on the spot market. Meanwhile, BI’s middle rate weakened 0.3% to IDR 14,777 / USD. Investors can look back at the FR0081 and FR0082, which have limited supply in the secondary market.