Demonstrations subside, SBN Weekend Strengthens. Domestic sentiment, rejection of the Ciptaker Law is still a short-term sentiment for the SBN market. This has attracted investors to short and long tenor SBNs. A number of elements of society, especially workers and students, were shown demonstrations for three days in a row. The protracted demonstration made investors doubt the certainty of the result of the law, because it will be revised again, or lead to the Constitutional Court (MK). However, often with the easing of demonstrations, investors are starting to be optimistic about returning to the bond market. This is also supported by a statement by President Joko Widodo who emphasized that there is no significant change in the contents of the Omnibus Law when compared to the Manpower Law Number 13 of 2003. The majority of investors are interested in SBN last weekend, except for 10-year and 15-year tenors which were relatively released investors. In terms of yield, 10-year SBN yielded a slight increase of 0.1 bps. Meanwhile, 15-year SBN tends to be stagnant today.
Pefindo Affirms Rating A for Barito Pacific Bonds. The Indonesian Securities Rating Agency (Pefindo) assigns A rating for Barito Pacific Tbk’s (BRPT) sustainable bonds I with a maximum target of IDR 1.5 trillion. The A rating reflects the company has a strong market share in its main business. This is also supported by good dividend distribution from the company’s core subsidiaries. On the other hand, Pefindo emphasized that the ratings are constrained by the moderate financial leverage, indirect access to the operating cash flow of the subsidiaries and also the risks inherent in the Company’s core operating segment. Simultaneously, Pefindo also decided to revise Barito Pacific’s Outlook to negative from previously declared stable. The correction in the company’s Outlook is in line with lower cash inflows from its subsidiary, Chandra Asri Petrochemical Tbk (TPIA). As is known in August 2020, Barito Pacific obtained a debt facility of USD 252.7 million from Bangkok Bank. This facility will be used by the company as Barito’s financial contribution in the construction and development of the 2×1,000 megawatt ultra-super critical power plant project owned by Indo Raya Tenaga. The ratio of net loans to EBITDA and FFO to BRPT loans is projected to weaken to around 4.4x and 7.6% on average for the next two years compared to 3.3x and 9.9% as at 31 December 2019. (Investor Daily )
IDR 53.57 Trillion Corporate PEN Fund Has Not Been Disbursed. The government has budgeted IDR 53.57 trillion for corporate financing in the framework of the 2020 National Economic Recovery (PEN) program. However, until now, the program budget is intended for corporations and State-Owned Enterprises This (BUMN) has not been distributed at all. Based on data from the Ministry of Finance (Kemenkeu), the ceiling is allocated for three programs. First, the placement of funds for labor-intensive corporate restructuring of IDR 3.42 trillion. Second, state equity participation (PMN) worth IDR 20.5 trillion. Third, government investment for BUMN working capital of IDR 29.65 trillion. Finance Minister Sri Mulyani Indrawati said that she was still waiting for the right time to distribute the financing budget for state-owned enterprises and labor-intensive corporations. Even though the entire PEN program budget including corporate financing must be absorbed this year as in Government Regulation (PP) of 2020 Number 23 which is the legal umbrella for the PEN program. This means that in less than three months the government must immediately disburse the budget which aims to assist the cash flow of private corporations and BUMNs. (Kontan)
Demonstrations and Cadev Declines, Close Sentiment a Week. Rupiah is in a strengthening trend for a week, amid positive sentiment on US stimulus. Meanwhile, the demonstration against the Ciptaker Law was not enough to hold back the strengthening of the rupiah. The rupiah exchange rate strengthened for 5 consecutive days, past the psychological level of IDR 14,800 / USD last weekend. On Friday, the rupiah strengthened slightly by 0.07% to IDR 14,675 / USD. On a weekly basis, the rupiah strengthened more than 1% from the previous week’s IDR 14,830 / USD. This appreciation of the rupiah, as the government passed the Omnibus Law on Job Creation on the first day of last week, was earlier than scheduled for October 8. Meanwhile, the decline in cadev of almost USD 2 billion in September was not sufficient to hold back the appreciation of the rupiah. On US external sentiment, global investors are anticipating stimulus talks which indicate that billions of dollars of fresh funds will be channeled into the real sector. Investors can start looking at PBS027, PBS026, PBS025, and PBS028. The four series are the series that will be offered at the Sukuk auction on Tuesday.