Decreased Yield Reduces Interest in Sukuk Auction. The government closed October 2020 by conducting an auction of State Sharia Securities (SBSN) or State Sukuk on Tuesday (27/10). In this auction, the government recorded a total incoming bid of IDR 20.9 trillion, or the number of incoming bids has decreased from the previous Sukuk auction of IDR 25.9 trillion. The decline in incoming bids occurred again, amid the rising trend in the price of Government Securities (SBN) with the benchmark 10-year tenor in the past month. The increase in the 10-year benchmark SBN price has occurred since the beginning of October 2020, marked by a downward trend in yields during the same period. Meanwhile, the biggest bid for Sukuk auction this time was recorded for the PBS028 series worth IDR 8.1 trillion, with a bid to cover (BTC) ratio of 1.7x. On the other hand, the smallest incoming offer was in the PBS027 series valued at IDR 1.2 trillion with a BTC ratio of 1.4x. For the record, the largest weighted average yield won was in the PBS028 series with 7.43%, and the smallest was in the SPNS14042021 series with 3.08%. In the closing auction in October 2020, the government managed to win IDR 12.4 trillion, or exceeding the indicative target of 10 trillion.
PNM Issues IDR 200 Billion Sukuk. Permodalan Nasional Madani (PNM) is offering Sukuk Mudharabah IV Year 2020 Phase I Series A worth IDR 200 billion. This 3-year tenor sukuk is offered with a trading unit of IDR 20 billion and floating profit sharing, as well as electronic distribution on October 27, 2020. Previously, PNM was still considering the impact of the Covid-19 pandemic before issuing bonds this year. Therefore, the company will only issue the remaining ceiling of sustainable bonds (PUB) at the end of 2020. For the record, the sustainable bonds are worth a total of IDR 6 trillion and to date the company has issued IDR 3.6 trillion. Meanwhile, the remaining ceiling is worth IDR 2.4 trillion. PNM will issue around IDR 500 billion to IDR 1 trillion in 4Q20 if conditions are favorable. Until 1H20, PNM succeeded in channeling financing through the PNM Mekaar and ULaMM programs worth IDR 7.69 trillion to 6.27 million customers. (Investor Daily)
BI: October inflation 0.08%. Bank Indonesia (BI) is optimistic that the Consumer Price Index (CPI) in October 2020 will begin to experience a slight increase in price (inflation). Based on the price monitoring survey until the fourth week of October 2020, inflation is expected to be 0.08% MoM. The central bank claims that inflation is at a low level and is still under control. With these developments, the inflation forecast for October 2020 is estimated at 0.97% YtD on a calendar year, and on an annual basis at 1.46% YoY. Contributors to inflation during the period under review came from commodity red chilies which increased by 0.09% MoM, shallots which rose by 0.03% MoM, and prices of cooking oil and broiler chicken which rose by 0.01% MoM respectively. (Kontan)
Investors are waiting for 3Q20 Indonesia’s GDP data. In addition to inflation data, market players are waiting for data on Indonesia’s economic growth for the 3Q20 period, until the presidential election (pilpres) of the United States (US). This week, a combination of positive domestic and foreign sentiment, such as: First, the domestic consumer price index (CPI), which is projected to have inflation, indicates that consumption will again increase. The market is projecting inflation of 0.08% MoM, compared to the previous month’s deflation of -0.05%. Second, the Markit Purchasing Managers Index (PMI) for the manufacturing sector for the October period is projected at the level of 46.8. Third, the voting for the US presidential election between the incumbent candidate Donald Trump and the challenger candidate Joe Biden. The market will also look at the US trade balance, which is likely to have a deficit of USD 64 billion. Fourth, the PMI for China’s services sector for the October period is estimated to be still expansionary at 54. Fifth, Indonesia’s 3Q20 Gross Domestic Product (GDP) data will provide an overview of the trend of domestic economic recovery. In the short term, investors can look at FR0081, FR0082, FR0086, and FR0087.