FR0086 and FR0087 Towards Par. These two series, which are projected to become benchmarks for 5-year and 10-year, have continued to record price increases since their publication on August 11, 2020. Based on Bloomberg data, FR0086 (6-year) and FR0087 (11-year) recorded yields of 5.53% and 6.53% respectively last weekend. This figure is much lower than the weighted average yields at the beginning of issuance of 5.82% and 6.75%. Investors are interested in these short tenors because they are more liquid, and not because the yields are higher like those offered in long tenors. On the other hand, the benchmark FR0081 and FR0082 also recorded price increases, but not as high as FR0086 and FR0087. In the same period, FR0081 and FR0082 recorded a decrease in yield of 7.2 bps and 2.3 bps, respectively.

Global Mediacom Issues IDR 1 Trillion Bonds. Global Mediacom Tbk (BMTR IJ) issues bonds and sukuk ijarah worth a total of IDR 1 trillion for refinancing and working capital needs. The parent company of MNC Media is conducting a sustainable public offering (PUB) II Global Mediacom Phase I. Meanwhile, the company is targeting the raised funds of IDR 1 trillion. All funds obtained from the PUB proceeds will be used for refinancing rupiah loans owned by the company and working capital. The company will pay off its bonds and sukuk ijarah loan in 2017 phase II with a loan facility that will mature on September 19, 2020 of IDR 400 billion.

The Government Performs Debt Conversion. The government continues its steps and strategies to convert part of the debt next year. This policy was carried out so that the cost of debt in the APBN was reduced. With the conversion step, it is possible that 2021 will not get an interest rate close to 0% as it is today. For the record, the period September 2019 – March 2020, the government has converted foreign debt denominated in US dollars worth USD 3.8 billion. The debt, which bears interest at the London Interbank Offered Rate (LIBOR), is converted into euros and yen, with interest rates remaining close to 0%.

Investors Pay Attention to External Sentiment. The improvement in US economic data is a positive sentiment for the market, amid the increasing number of the Covid-19 pandemic. Investors are also still watching positive sentiment, the US continued stimulus package. A week ago, the rupiah exchange rate strengthened 0.15% to IDR 14,773 / USD on the spot market. Meanwhile, BI’s middle rate strengthened 0.88% to IDR 14,789 / USD. Earlier this week, the rupiah was projected to strengthen again, continuing last week’s appreciation. Investors can again start watching the FR0086 and FR0087, ahead of the SUN auction on Tuesday. The two series of prospective benchmarks have continued to record strengthening since they were published on August 11, 2020.


Global Mediacom Issue Bonds

Government Debt Conversion

Lower Bank Net Interest Margin

-REVIEW (Aug. 19, 2020)-
FR0081 (5yr): -7.2 Bps to 103.55 (5.64%)
FR0082 (10yr): -2.3 Bps to 102.27 (6.68%)
FR0080 (15yr): -1.2 Bps to 102.67 (7.20%)
FR0083 (20yr): -3.0 Bps to 102.05 (7.30%)

FR0086 (6yr): -10.5 Bps to 99.82 (5.53%)
FR0087 (11yr): -1.1 Bps to 99.70 (6.53%)

UST 2yr: -0.003 point to 0.14%
UST 5yr: +0.006 point to 0.28%
UST 10yr: +0.012 point to 0.68%
UST 30yr: +0.028 point to 1.42%
German Bund 10yr: -0.010 point to -0.47%
UK Gilt 10yr: +0.017 point to 0.23%

CDS 2yr: -0.70% to 42.30
CDS 5yr: -1.08% to 101.95
CDS 10yr: +1.80% to 169.39

WTI: -0.02% to USD43.11/Barrel
BRENT: -0.19% to USD45.37/Barrel
Source: Bloomberg