-GOVERNMENT BONDS-
IMF Projection Encourages Short Tenor SUN. International Monetary Fund (IMF) projects that the global economy in 2020 will experience a contraction of 4.4%. This projection is better than last April’s projection of a contraction of 4.9%. Yesterday, the benchmark SUN for short tenors FR0081 and FR0082 recorded a yield decline of more than 3 bps to 5.68% and 6.81% respectively, according to Bloomberg data. Apart from the benchmark series, short tenor SUN FR0086 and FR0087 also recorded a decrease in yield to the level of 5.66% and 6.80%. On the other hand, the IMF sees that the recovery will be quite long. Covid-19, which is still spreading, has made a number of countries hold back on reopening public activities and some have even started implementing local lockdowns. The IMF also sees that the world economic recovery to pre-pandemic levels is still long and prone to reversals.
-CORPORATE BONDS-
Pefindo Affirms BBB Rating for Kapuas Prima Coal. Indonesian Securities Rating Agency (Pefindo) affirms BBB ratings for Kapuas Prima Coal Tbk (ZINC) and Bond I 2018 Series C. These bonds are worth IDR 1 billion which will mature on December 21, 2020 Pefindo stated that the Kapuas Prima Coal debt securities which are due to mature will be paid using the company’s internal funds. As of August 31, 2020, Kapuas Coal cash and cash equivalents were recorded at IDR 53.1 billion. Meanwhile, the company’s rating outlook is stable. Pefindo emphasized that the Covid-19 pandemic had a high enough impact on Kapuas Prima Coal’s business. Global demand decreased significantly which resulted in lower commodity prices for zinc, lead and silver. This condition can be seen in the negative revenue growth of 30% in the financial performance of the first semester of 2020. (Investor Daily)
-MACROECONOMY-
BI Survey: Realization of Investment Activities Improved. The results of the 3Q20 Bank Indonesia Business Activity Survey (SKDU) show that investment realization is showing improvement with weighted net balance (WNB) of -1.27%. Meanwhile, when compared to 2Q20, it contracted with WNB -13.06%. In the report, if viewed from the economic sector, improvements in the realization of investment activities in 3Q20 occurred in several main sectors, namely mining and quarrying which grew positively with WNB 4.95%. In addition, several other sectors also experienced improvements, such as the WNB services sector -0.09% and the WNB -2.88% manufacturing sector. In line with the improving condition of business activities and is expected to continue into 4Q20, respondents are more optimistic about future forecasts as reflected in the forecast for positive growth in investment with WNB of 2.01%. (Kontan)
-RECOMMENDATION-
Investors Observe IMF and World Bank Projection. Investors are still watching the revision of the IMF which projects a lower 2020 Indonesian economy. Market players also anticipate negative sentiment, the World Bank report regarding the increase in Indonesia’s foreign debt in 2021. Meanwhile, external sentiment comes from US stimulus which has reached a dead end. Yesterday, the rupiah exchange rate edged down by 0.05% to IDR 14,718 / USD on the spot market. Meanwhile, BI’s middle rate also edged down 0.09% to IDR 14,780 / USD. In the short term, investors can look back at short tenors, FR0081, FR0082, FR0086, and FR0087.
-REVIEW (Okt. 14, 2020)-
-PRICE OF BENCHMARK SERIES-
FR0081 (5yr): -3.8 Bps to 103.29 (5.68%)
FR0082 (10yr): -3.3 Bps to 101.29 (6.81%)
FR0080 (15yr): -1.8 Bps to 101.23 (7.35%)
FR0083 (20yr): -2.2 Bps to 101.18 (7.38%)
FR0086 (6yr): -4.1 Bps to 99.23 (5.66%)
FR0087 (11yr): -0.7 Bps to 97.73 (6.80%)
-YIELD OF GLOBAL BONDS-
UST 2yr: +0.001 point to 0.14%
UST 5yr: -0.000 point to 0.30%
UST 10yr: -0.008 point to 0.72%
UST 30yr: -0.006 point to 1.50%
German Bund 10yr: -0.025 point to -0.58%
UK Gilt 10yr: -0.020 point to 0.21%
-CDS OF INDONESIA BONDS-
CDS 2yr: +1.60% to 41.57
CDS 5yr: +1.74% to 94.27
CDS 10yr: +1.27% to 159.72
-CRUDE OIL PRICES-
WTI: +2.08% to USD41.04/Barrel
BRENT: +2.04% to USD43.32/Barrel
Source: Bloomberg
