Significant Recovery Pushes ICBI to the Highest Level. The bond market has responded positively to the return of investors to take a position, in line with the projected global economic recovery since activity in a number of countries. This investor optimism was also supported by the appreciation of the rupiah from around IDR 16,500/USD to the level of IDR 14,000/USD. The return of foreign investors, also supported by BI, which also entered the domestic bond market. Based on Bloomberg data, ICBI was at 284.31 at the close yesterday (01/07). This figure is approaching the highest level of ICBI 286.40 in early March 2020. Investor optimism is also supported by the downward trend in benchmark interest rates, and BI’s support in providing positive sentiment. On the other hand, government bonds have the opportunity to record better performance than corporate bonds. Meanwhile, corporate bonds are faced with challenges in the ability to pay bonds amid the current decline in economic activity.

Indonesia Eximbank Issues IDR 148 Billion Bonds and Sukuk Mudharabah. Indonesian Export Financing Institution (LPEI) will issue bonds worth IDR 48 billion, and mudharabah sukuk IDR 100 billion. This publishing plan is part of a sustainable public offering (PUB) V with a maximum funding target of IDR 22 trillion. Meanwhile, PUB V Phase I 2020 reached IDR 48 billion was offered with a principal interest of 7.60%, with a 3-year term. Meanwhile, the issuance of mudharabah sukuk is part of PUB II mudharabah sukuk with a maximum funding target of IDR 2 trillion. In PUB II Phase I 2020 this IDR 100 billion mudharabah sukuk has a 370-day term. The revenue sharing from this mudharabah sukuk ratio is 47.37% of the revenue generated, with an indication of profit sharing of 6.75% per year. (Investor Daily)

BPS: June Inflation of 0.18%. Covid-19 pandemic made a change in the pattern of the 2020 inflation rate. BPS recorded that the Lebaran inflation actually increased, or inflation in June 2020 of 0.18%. This figure is higher than Ramadan and Idul Fitri inflation in April and May by 0.08% and 0.07%, respectively. The increase in inflation was in line with the increase in the price of chicken meat with a share of 0.14%. In addition, there was also an increase in air transportation tariffs which contributed 0.02% inflation. The health expenditure group also recorded 0.13% inflation, although it started to decline from 0.27% the previous month. For example, health group inflation was contributed by demand for medicines and health products. (Kontan)

Economic Data Expectation Support Bond Market. Economic data such as the Consumer Confidence Index (IKK) which has the potential to increase from the level of 77.8 in May, is now positive sentiment. The increase in numbers indicates a signal of recovery in economic growth. On the other hand, investors are still paying close attention to the potential weakening of the rupiah, amid the uncertainty of global political conditions. The ratification of Hong Kong’s security law by the Chinese government has the potential to increase regional tensions. This political issue can trigger a reaction between the US and Britain. Investors can start watching PBS002 and PBS026 ahead of the sukuk auction next Tuesday. PBS002 and PBS026 are the most popular series, as well as the most won by the government in the previous auction.

-REVIEW (July 1, 2020)-
FR0081 (5yr): +2.5 Bps to 99.87 (6.52%)
FR0082 (10yr): +2.6 Bps to 98.51 (7.20%)
FR0080 (15yr): -0.1 Bps to 99.14 (7.59%)
FR0083 (20yr): +1.1 Bps to 98.63 (7.63%)

UST 2yr: +0.013 point to 0.16%
UST 5yr: +0.023 point to 0.31%
UST 10yr: +0.020 point to 0.67%
UST 30yr: +0.013 point to 1.42%
German Bund 10yr: -0.060 point to -0.39%
UK Gilt 10yr: +0.039 point to 0.20%

CDS 2yr: -4.97% to 53.90
CDS 5yr: -3.13% to 129.40
CDS 10yr: -4.01% to 191.84

WTI: +4.05% to USD39.82/Barrel
BRENT: +1.84% to USD42.03/Barrel