Investors Worried about US Political Certainty. The price of Government Securities (SUN) benchmark series for short and medium tenors fell yesterday. The pressure on the bond market was triggered by concerns and political certainty after the United States (US) presidential election. To date, Democratic candidate Joe Biden still outperforms Republican Trump. Biden with the provisional electoral vote of 238, while Trump received 213 votes. To win this, one candidate must get 270 votes from a total of 538 electors representing 150 million US people who participated in this presidential election. Investors are also anticipating various possibilities such as a lawsuit against the presidential election results from the losing candidates. Yesterday, both FR0081 and FR0082 recorded yield increases of 4.3 bps and 3.3 bps, respectively, according to Bloomberg data.

Alam Sutera New Bonds. Alam Sutera Realty Tbk (ASRI) issued global bonds worth a total of USD 422.40 million or equivalent to IDR 6.25 trillion (assuming an exchange rate of IDR 14,800 / USD) in two series which will mature in 2024 and 2025. The issuance is carried out in the framework of a roll-over to replace two bonds worth USD 545 million which will mature in 2021 and 2022. These bonds have a tiered interest rate (step up coupon bond) per year. The bonds were issued on November 2 at the Singapore Stock Exchange (SGX). These debt securities were issued in two nominal values, first, New Notes 2024 amounting to USD 171.39 million and New Notes 2025 amounting to USD 251,003 million. The interest rate offered for debt securities in 2024 each year starting from the first year is 6%, then 8% in the second year, 11% in the third year until maturity. Then for the 2025 debt securities of 6.25% in the first year, 8.25% in the second year, 11% in the third year and 12% until maturity. (CNBC Indonesia)

Expensive Cost of Indonesia’s Economy. Minister of Finance said Indonesia’s economy in 3Q20 improved compared to the previous quarter. However, this achievement comes with the consequence of higher costs, namely an enlarging budget deficit. Data from the State Budget (APBN) shows that during January-September 2020 the budget deficit reached IDR 687.5 trillion. This budget deficit is equivalent to 4.16% of Indonesia’s gross domestic product (GDP). When compared to the realization in the same period in 2019, namely IDR 252.41 trillion, the January-September 2020 deficit grew 170.2%. With this high cost, the Minister of Finance predicts that the economy in July-September 2020 will be in the range of minus 2.9% to minus 1%. The hope is that it will be better than the realization of economic growth in April-June 2020 which contracted by 5.32%. (Kontan)

Waiting for the 3Q20 Indonesia GDP Data. Apart from the sentiment of the US presidential election, market players are also waiting for the data on Indonesia’s Gross Domestic Product (GDP) for the 3Q20 period. Previously, the Minister of Finance projected that Indonesia’s economy in the third quarter of this year will contract again, namely in the range of minus 2.9% to minus 1%. This projection is better than the realization of economic growth in the previous quarter which was minus 5.32%. From external sentiment, the competition for the US presidential election is tight, with Joe Biden noted to be still superior in the votes. Meanwhile, the domestic bond market is likely to continue to weaken, anticipating various possibilities such as the losing candidate’s presidential election result suit. Yesterday, the rupiah strengthened 0.14% to IDR 14,565 / USD on the spot market. The Bank Indonesia (BI) middle rate strengthened 0.35% to IDR 14,557 / USD per US dollar. In the short term, investors can look at the short tenors FR0081, FR0082, FR0086, and FR0087 which recorded a decline in prices yesterday.

-REVIEW (Nov. 4, 2020)-
FR0081 (5yr): +4.3 Bps to 103.94 (5.51%)
FR0082 (10yr): +3.3 Bps to 102.81 (6.60%)
FR0080 (15yr): +1.8 Bps to 102.95 (7.16%)
FR0083 (20yr): -0.2 Bps to 102.71 (7.23%)

FR0086 (6yr): +3.0 Bps to 99.68 (5.56%)
FR0087 (11yr): +3.6 Bps to 99.06 (6.62%)

UST 2yr: -0.022 point to 0.14%
UST 5yr: -0.067 point to 0.32%
UST 10yr: -0.131 point to 0.76%
UST 30yr: -0.139 point to 1.54%
German Bund 10yr: -0.018 point to -0.63%
UK Gilt 10yr: -0.065 point to 0.20%

CDS 2yr: -0.19% to 38.75
CDS 5yr: -2.05% to 93.11
CDS 10yr: -0.18% to 159.01

WTI: +3.95% to USD39.15/Barrel
BRENT: +3.82% to USD41.23/Barrel
Source: Bloomberg