*-GOVERNMENT BONDS-*

*IMF cuts economic projections.* The International Monetary Fund (IMF) projects that the pace of the world economy in 2020 will be minus 4.9%. This figure is lower than the previous prediction in April of minus 3%, as the global economic pace is leading to an economic crisis and fears of a second wave corona virus outbreak. Meanwhile, the global economy is projected to be 5.4% in 2021 or lower than previously predicted. This depreciated the rupiah, weakening 0.32% to a level of IDR 14,175 / USD on the spot market. Meanwhile, the BI middle rate weakened 0.51% to IDR 14,231 / USD. The strengthening of the US dollar is in response to the US plan to raise tariffs on goods from Europe worth USD 3.1 billion

 

*-CORPORATE BONDS-*

*Two SOEs Gather USD 2 Billion Funds.* The National Electricity Company is aiming for funds worth IDR 1.5 billion from global bond offerings. Meanwhile, Sarana Multi Infrastruktur (SMI) is exploring loans of up to USD 500 million. SMI is also listed as a bond issuer, which in the near future will distribute cash dividends of IDR 500 billion, equivalent to 29% of the company’s net profit last year. Meanwhile, PLN will hold a global bond offering period worth IDR 1.5 billion this week. PLN took advantage of the government’s success in issuing global sukuk up to USD 2.5 billion last week. PLN’s global bond issuance proposal has received a BBB rating with a stable outlook from Fitch Ratings, and Baa2 from Moody’s Investor Service. (Investor Daily)

 

*-MACROECONOMY-*

*Government Expands Budget Deficit to 6.34% of GDP.* Through Presidential Regulation (Perpres) Number 72 of 2020, the government revised the 2020 state budget posture. This regulation changed the previous regulation, namely Perpres Number 54 of 2020 concerning Changes in Posture and State Budget Details for the 2020 Budget Year. This Perpres officially widened the budget deficit from 5.07 % to 6.34% of GDP. The government changed the state budget from previously IDR 1,760.9 trillion to IDR 1,699.9 trillion. This amount consists of tax revenue of IDR 1,404.5 trillion, non-tax state revenue of IDR 294.1 trillion, and receipt of grants worth IDR 1.3 trillion. Then, the state budget was changed from IDR 2,613.8 trillion to IDR 2,739.1 trillion. (Kontan)

 

*-RECOMMENDATION-*

*Last SUN Auction 2Q20.* Investors can return to watch FR0081, FR0082, FR0080, FR0083 and FR0076 ahead of the SUN auction on Tuesday (6/30) next week. In addition to the five series, the government also offers SPN03202001 (New Issuance) 3-month tenor; and SPN12210701 (New Issuance) 12-month tenure at the last SUN auction in this 2Q20 period. For the record, the government is aggressively pursuing a front loading strategy during 1H20, in order to meet funding for handling a pandemic and economic recovery. This aggressive issuance of government bonds, pressured the prospect of corporate bonds. At present, investors will be more selective in buying corporate bonds. As a lot of cash flow companies are disrupted, and it is feared to affect the ability to pay interest and principal.

 

*-REVIEW (June 25, 2020)-*

*-PRICE OF BENCHMARK SERIES-*

*FR0081 (5yr):* +4.2 Bps to 99.81 (6.54%)

*FR0082 (10yr):* +4.6 Bps to 98.84 (7.15%)

*FR0080 (15yr):* +3.5 Bps to 99.45 (7.56%)

*FR0083 (20yr):* +3.0 Bps to 98.85 (7.61%)

 

*-YIELD OF GLOBAL BONDS-*

*UST 2yr:*   –0.001 point to 0.18%

*UST 5yr:*   +0.003 point to 0.33%

*UST 10yr:* +0.006 point to 0.68%

*UST 30yr:* +0.006 point to 1.43%

*German Bund 10yr:* -0.028 point to -0.47%

*UK Gilt 10yr:* –0.034 point to 0.15%

 

*-CDS OF INDONESIA BONDS-*

*CDS 2yr:* +1.75% to 58.82

*CDS 5yr:*   +4.56% to 132.20

*CDS 10yr:* +1.38% to 212.29

 

*-CRUDE OIL PRICES-*

*WTI:*      +1.86% to USD38.72/Barrel

*BRENT:* +1.83% to USD41.05/Barrel