Easing PSBB Sentiment, Encouraging SBN Strengthening. A number of market players softened towards the policy of reintroducing the Jakarta PSBB. This policy, considered not to be as strict as feared, kept the economy going even though it was limited. At the end of last week, all benchmark SUN prices closed higher at the premium level. Meanwhile, FR0086 and FR0087 also closed higher with the price level still below par (discount). Last week’s bond market movement was also amidst the volatility of the rupiah, which faced a psychological level of IDR 15,000 / USD. On Friday, the rupiah exchange rate weakened 0.24% to IDR 14,890 / USD on the spot market. Meanwhile, BI’s middle rate weakened 0.72% to IDR 14,979 / USD.

Indonesia Eximbank Pays Debts of IDR 1.34 Trillion. Indonesia Eximbank is ready to pay debts due to be worth IDR 1.34 trillion. The debt comes from two bonds and one sukuk mudharabah issued by the company. The debts that will mature this September are the IEB IV Phase VI Sustainable Bonds of 2019 amounting to IDR 283 billion, then the IEB II Phase VI 2015 Series C Sustainable Bonds, which amounted to IDR 913 billion and finally the IEB I Phase IV Sustainable Sukuk Mudharabah 2019 worth IDR 150 billion. Meanwhile, the Indonesian Securities Rating Agency (Pefindo) affirmed the AAA rating or the highest for the Indonesia Eximbank Bond IV Phase VII Year 2019 Series A worth IDR 600 billion which will mature on November 9, 2020. Based on the company’s brief prospectus, the plan to issue the bonds is part of the sustainable public offering (PUB) V with a maximum target of IDR 22 trillion. The PUB V Phase I 2020 offering of IDR 48 billion is offered with a principal interest of 7.60% per year, with a period of three years from the date of issuance. (Investor Daily)

Trade Balance Projected in Surplus. Domestic economic pressure has made Indonesia’s trade balance continue to record a surplus. Some economists are projecting a trade surplus in August 2020 worth USD 1.59 billion to USD 2.2 billion. Countries such as China, the European Union and ASEAN have started to experience improved economic growth, so that the value of Indonesia’s exports has increased. Exports to China, Japan and the US also increased as the manufacturing industry began to improve. Meanwhile, the price of Indonesia’s export commodities that experienced an increase throughout August 2020 was CPO, which rose 10.03% on a monthly basis. Then, the price of raw rubber rose 22.63% on a monthly basis. For the record, in July 2020 Indonesia’s trade balance surplus reached USD 3.26 billion. (Kontan)

BI Holds Interest Rate of 4%. BI is projected to keep the BI 7-DRRR rate for August at 4% level. Previously, this Central Bank had cut the BI 7-DRRR by 100 bps throughout 2020. If this is true, then it is in line with the Fed’s projection at the FOMC this week which is projected to keep the Fed Rate at the level of 0% -0.25%, as interest rates have been lower. On the other hand, the Fed may issue another monetary stimulus. Whether it is BI 7-DRRR, investors will also pay close attention to Jakarta’s PSBB policy, whether it will end after the next two weeks, or be extended again. In the short term, investors can take advantage of the volatility of FR0086 which has reached its lowest price level, and FR0087 which is far below par, namely at the level of 97.43 at the close of last Friday.

-REVIEW (Sept. 11, 2020)-
FR0081 (5yr): -5.4 Bps to 103.98 (5.53%)
FR0082 (10yr): -0.8 Bps to 100.49 (6.93%)
FR0080 (15yr): -2.2 Bps to 100.80 (7.40%)
FR0083 (20yr): -2.9 Bps to 100.71 (7.42%)

FR0086 (6yr): -1.1 Bps to 99.69 (5.56%)
FR0087 (11yr): -7.9 Bps to 97.43 (6.84%)

UST 2yr: -0.011 point to 0.12%
UST 5yr: -0.016 point to 0.25%
UST 10yr: -0.011 point to 0.66%
UST 30yr: -0.007 point to 1.41%
German Bund 10yr: -0.048 point to -0.48%
UK Gilt 10yr: -0.045 point to 0.18%

CDS 2yr: +0.31% to 35.23
CDS 5yr: +0.31% to 89.24 (as of Sept. 8, 2020)
CDS 10yr: +1.08% to 154.60 (as of Sept. 8, 2020)

WTI: +0.08% to USD37.33/Barrel
BRENT: -0.57% to USD39.83/Barrel
Source: Bloomberg