FR0081 is flat ahead of the 3Q20 premiere SUN auction, posting prices and yields at 100.75 and 6.31% respectively, based on Bloomberg data. The movement of the FR0081 reference series is supported by high foreign interest in short tenors. Based on data from the Directorate General of Budget Financing and Risk Management (DJPPR), foreign ownership in the 1-year SBN tenure increased from 2.4% in 2019 to 3.3% in the June 2020 period. A similar case also occurred in 1-2-year tenors from 6.7% to 9.1% in the same period. In the previous Government Securities auction (SUN), FR0081 posted an incoming bid of up to IDR 27.94 trillion or 38.7% of the total incoming offer of IDR 72.03 trillion. We project market participants to return to high interest in FR0081, amid waiting for the June trade balance data release on Wednesday (07/15) and the BI 7-DRRR benchmark interest rate on Thursday (07/16).

TELE Delays Bond Interest Payment. Tiphone Mobile Tbk (TELE IJ) has again postponed the 15th interest payment on Tiphone I Phase II 2016 Continuous Bonds Series C. Based on data from the Indonesian Central Securities Depository (KSEI), this bond has a debt principal valued at IDR 110 billion, and will only mature on October 14, 2020, with a coupon rate of 10.65%. Previously, TELE also postponed the payment of principal and interest on bonds issued in 2013. TELE was noted to have failed debt obligations worth IDR 751.43 billion with TELE01CN3 bond creditors. The amount consists of IDR 231 billion of principal bonds and IDR 6.06 billion of interest due on June 22, 2020, and IDR 500 billion of principal bonds and IDR 14.37 billion of interest due on June 19, 2020. (Bisnis Indonesia)

Pandemic Encourages Rural Bank NPL. Based on data from the Financial Services Authority (OJK), the collection of Third Party Funds (DPK) of Rural Credit Banks (BPR) as of April 2020 worth IDR 100.59 trillion, down 1.8% compared to the end of 2019 worth IDR 102 .5 trillion. While lending reached IDR 111.4 trillion, it still grew 2.4% YtD. Whereas non-performing loans (NPLs) were recorded to have increased to 8.32% in April 2020 from 6.8% in December 2019. Meanwhile, the Indonesian People’s Credit Bank Association (Perbarindo) noted, there were 270,900 BPR customers who had restructured loans worth IDR 15.1 trillion as of the end of June 2020. The realization is around 50.8% of the MSME credit that has the potential to be restructured. (Kontan)

June Trade Balance Projection USD 1.2 Billion Surplus. Market players’ optimism in the June trade balance will be better than the previous month. The projected trade balance surplus is driven by a decline in imports that exceeds the decline in exports, due to the still low manufacturing activity in Indonesia. While the decline in exports, is still happening in line with the low global manufacturing activity. For the record, almost all of Indonesia’s trading partner countries are still under indications of expansion. Besides FR0081, which has a high chance of attracting investors, market players can also look at the price of FR0082 towards par level, supported by liquidity and outstanding 10-year benchmark SUN.

-REVIEW (July 13, 2020)-
FR0081 (5yr): +0.5 Bps to 100.75 (6.31%)
FR0082 (10yr): +0.3 Bps to 99.65 (7.04%)
FR0080 (15yr): -0.4 Bps to 99.65 (7.53%)
FR0083 (20yr): -1.2 Bps to 99.35 (7.56%)

UST 2yr: -0.002 point to 0.15%
UST 5yr: -0.020 point to 0.28%
UST 10yr: -0.027 point to 0.61%
UST 30yr: -0.029 point to 1.30%
German Bund 10yr: -0.050 point to -0.41%
UK Gilt 10yr: +0.032 point to 0.18%

CDS 2yr: -2.08% to 50.44
CDS 5yr: -0.91% to 124.48
CDS 10yr: -1.74% to 190.99

WTI: -1.10% to USD40.10/Barrel
BRENT: -1.20% to USD42.72/Barrel