-GOVERNMENT BONDS-
New Issuance of FR0086 and FR0087. The Government Securities (SUN) market moved relatively stronger on Thursday, supported by expectations of economic recovery and ahead of the release of foreign exchange reserves per July. Meanwhile, the Consumer Confidence Index for the July 2020 period was at the level of 86.2, an increase from 83.8 in the previous month, based on a survey by Bank Indonesia (BI). Expectations for global economic recovery are in line with the release of the PMI for US non-manufacturing as of July at the level of 58.1. This figure is better than the previous month’s 57.1 and the market projection at the level of 55. On the other hand, the government, through the DJPPR, will offer new series (new issuance) FR0086 and FR0087 in the planned SUN auction on Tuesday (11/08) next week. The two series have 6-year and 11-year tenors, complementing the FR0081 and FR0082 which are currently the benchmark 5-years and 10-years.
-CORPORATE BONDS-
J Resources Paid Lunas MTN IDR 500 M. Gold Resources issuer J Resources Asia Pacific Tbk (PSAB) issued Phase V Sustainable Bonds amounting to IDR 650 billion on July 30, 2020. Based on information disclosure on the Indonesia Stock Exchange (IDX), the bonds consist of the two series, namely Series A with a tenor of 370 days and Series B with a tenor of 3 years. Series A bonds amounting to IDR 335 billion, with an interest rate of 9.25% per annum, with a tenor of 370 calendar days from the date of issuance. Meanwhile, Series B amounted to IDR 315 billion, with a bond interest rate of 10.25% per year, with a tenor of 3 years. The bonds were issued scripless, offered at a value of 100% of the principal amount of the bonds. All proceeds from the bonds, after deducting issuance costs, will be used to be channeled in the form of loans by the company to J Resources Nusantara (JRN), a subsidiary. (CNBC Indonesia)
-MACROECONOMY-
BI Private Placement of IDR 82.1 Trillion. Based on data from the DJPPR, the government issued four series of variable rate (VR) government bonds through a private placement mechanism to Bank Indonesia on Thursday (06/08). Issuance is the first transaction to fulfill part of public goods financing, out of a total public goods financing requirement of IDR 397.6 trillion. This transaction is an implementation of the burden sharing scheme as a form of synergy between the government and Bank Indonesia in efforts to finance the handling of the impact of the Covid-19 pandemic and national economic recovery (PEN). The purpose of this private placement is to maintain the credibility and integrity of fiscal and monetary policy management; maintaining fiscal space and sustainability in the medium term; and implementing prudent, transparent and accountable governance.
-RECOMMENDATION-
Foreign Exchange Reserves to Support the Weekend SUN Market. Weekend SUN is projected to remain in a positive trend, supported by stable foreign exchange reserves which BI will release today. Yesterday, the rupiah exchange rate weakened 0.2% to IDR 14,585 / USD on the spot market. Meanwhile, the BI middle rate strengthened 0.3% to IDR 14,587 / USD. Rupiah pressure was still responding to the contraction in Indonesia’s 2Q20 GDP which fell by -5.32%. On the other hand, market players are looking forward to certainty of stimulus from the US in an effort to reduce the impact of the Covid-19 pandemic.
