-GOVERNMENT BONDS-
Financial Note Speech Encourages Strengthening of Short Tenors. A number of investors are releasing long tenor Government Securities (SBN), following President Joko Widodo’s financial note addressing the 10-year SBN interest rate at 7.29% in 2021. These yield higher than the 10-year FR0082 yield currently at 6.74% level. On the other side, the short tenor FR0081 posted a yield decrease of more than 5 bps to 5.76% level. Buying short tenors, compared to long tenors, is a pattern that occurs in a country whose economy is under pressure. Meanwhile, in the speech, inflation was pegged at the level of 3% in 2021, making expectations that next year’s yield will increase. In addition, the movement in SBN yields at the weekend, also amidst the awaited release of the BI 7-DRRR benchmark interest rate in August, is projected to remain at the 4% level.
-CORPORATE BONDS-
Mayora Issues IDR 500 Billion Bonds. Mayora Indah Tbk (MYOR IJ) will issue IDR 500 billion of IDR 500 billion sustainable bonds II phase I in 2020. The bonds are part of the Sustainable Public Offering (PUB) II which is targeted to reach IDR 2 trillion. Based on Mayora Indah’s prospectus, PUB II phase I will be issued in four series, namely Series A with a 370-day tenor, Series B with a 4-year tenor, Series C with a 5-year term, and Series D with a 7-year term. . Mayora Indah also stated that the first bond interest payment will be made on December 9, 2020 and the bond payment in full (bullet payment) at maturity, namely September 19, 2021, for Series A, September 9, 2023 for Series B, September 9, 2025 for Series C and September 9, 2027 for Series D. In addition, the minimum purchase order of these bonds is IDR 5 million.
-MACROECONOMY-
Maximum KUR Super Micro interest is 6%. The Financing Policy Committee for MSMEs has determined that the Super Micro people’s business credit (KUR) interest rate scheme is set at 0% until December 31, 2020; and 6% after 31 December 2020 with a maximum credit amount of IDR 10 million. Meanwhile, prospective KUR recipients receive assistance with a business length of less than six months with conditions, following the mentoring program. Meanwhile, dismissed employees are not required to have a business for at least three months as stipulated in the Regulation of the Coordinating Minister for Economic Affairs Number 8 of 2019 concerning KUR Guidelines. This step is expected to accelerate the economic recovery in the 3Q20 period.
-RECOMMENDATION-
BI 7-DRRR Fixed 4%. Bank Indonesia (BI) is projected to keep its August 7-DRRR benchmark interest rate at 4%. This projection is in line with efforts to maintain monetary stability that supports the real sector. On the other hand, BI’s decision to hold the benchmark interest rate will have a positive impact on the bond and stock markets. Currently, market players are still watching the development of stimulus to boost the domestic economy, and the development of the Covid-19 vaccine. From the external side, sentiment still comes from the geopolitical relationship between the US and China ahead of the US election. In addition, NHKSI Research sees the impact of providing the stimulus on the PEN program which will be seen at the end of the year. At the end of last week, the rupiah closed down 0.14% at IDR 14,795 / USD on the spot market. With BI’s middle rate, weakened 0.27% to the level of IDR 14,877 / USD. In the short term, investors can watch that FR0086 and FR0087 are still below the par level, continuing to move higher.
Reference
https://investor.id/macroeconomics/bunga-kur-super-mikro-06
-REVIEW (Aug. 14, 2020)-
-PRICE OF BENCHMARK SERIES-
FR0081 (5yr): -5.5 Bps to 103.06 (5.76%)
FR0082 (10yr): -0.1 Bps to 101.83 (6.74%)
FR0080 (15yr): +0.3 Bps to 102.50 (7.22%)
FR0083 (20yr): -1.4 Bps to 101.72 (7.33%)
FR0086 (6yr): -2.1 Bps to 99.12 (5.68%)
FR0087 (11yr): -5.0 Bps to 99.62 (6.55%)
-YIELD OF GLOBAL BONDS-
UST 2yr: +0.006 point to 0.15%
UST 5yr: -0.006 point to 0.28%
UST 10yr: -0.021 point to 0.68%
UST 30yr: -0.013 point to 1.43%
German Bund 10yr: -0.030 point to -0.45%
UK Gilt 10yr: -0.027 point to 0.21%
-CDS OF INDONESIA BONDS-
CDS 2yr: -0.50% to 43.30
CDS 5yr: +2.44% to 105.35
CDS 10yr: -0.46% to 168.45
-CRUDE OIL PRICES-
WTI: +2.09% to USD42.89/Barrel
BRENT: +1.27% to USD45.37/Barrel
Source: Bloomberg
