The focus of funding sources on short and long tenors made the government selective in winning the medium tenor at the Sukuk auction yesterday. The highest yield expectations were PBS029 and PBS004, up to 7.50% and 7.60%, respectively, amid the government’s efforts to reduce the cost of funds. On the other hand, the government’s selective stance has made the results of the Sukuk auction this time only worth IDR 4.5 trillion or below the indicative target set at IDR 12 trillion. For the record, the government has again offered an additional auction (green shoe option) of Sukuk on Wednesday (10/03). The government again offered PBS027, PBS017, PBS029, PBS004, and PBS028, with each weighted average yield at the level of 4.83%; 5.61%; 6.62%; 6.73%; 7.13%.

Three Companies Delay Debt Securities Payment. A number of companies have said to postpone the payment of interest on medium term notes (MTN) or short-term debt securities and long-term debt securities in early March 2021. These companies include Karawang Jabar Industrial Estate, Barata Indonesia, and Perikanan Nusantara. Meanwhile, Karawang Jabar Industrial Estate recorded long-term debt securities consisting of five series, including long-term notes of Karawang Jabar Industrial Estate I Year 2019 series A worth IDR 345 billion, series B worth IDR 50 billion, series C worth IDR 17 billion, series D worth IDR 24.5 billion, and series E worth IDR 21 billion. These five long-term debt securities have an interest rate of 12%, the frequency of which is recorded interest payments on a quarterly basis. The company should pay the interest on the long-term debt securities on March 3, 2021 for the 5th coupon. (Liputan 6)

Village Fund Distribution Reaches IDR 5.34 Trillion. The Minister of Villages, Development of Disadvantaged Areas and Transmigration (PDTT) said, until March 8, 2021, village funds that have been distributed have reached IDR 5.34 trillion. This distribution is equivalent to 7% of the budget ceiling for village funds this year which reached IDR 72 trillion. Of IDR 5.34 trillion, village funds were used for IDR 215.29 billion and IDR 519.74 billion for safe covid-19 villages. Until March 8, 2021, the absorption of village funds nationally has reached 23,096 villages. Meanwhile, from the total budget ceiling of IDR 72 trillion, IDR 24.08 trillion of which was distributed to areas that carried out micro PPKM. As of March 8, 2021, the absorption of village funds at the PPKM micro location has reached IDR 3.2 trillion which has been distributed to 12,956 villages. (Kontan)

Green Shoe Option Sukuk Amid UST Yield Increase. Sentiment on the passing of the US stimulus law and the increase in UST yield are still driving the yield increase at the Green Shoe Option Sukuk auction today. UST yields closed at 1.60% on Monday (08/03) trading, before finally returning to the 1.54% level. The UST yield hike is triggered by the prospect of economic recovery and the potential for an increase in US inflation. This has made global financial market players wary of reducing the Fed’s quantitative easing program, which could trigger a taper tantrum.