SUN Mixed amidst CDS Increase. The movement of SUN benchmark at the beginning of the week was mixed. A number of investors are again hunting for safe haven assets, amid the spike in Covid-19 cases in Europe and Indonesia. Prices of FR0081, FR0082, and FR0080 closed higher, even FR0086 returned to the par level. Market players are interested in fixed income assets, amid pessimism that Indonesia’s domestic economy will not recover in a short time. This selective buy response, as BI maintains its benchmark interest rate at the 4% level. On the other hand, investors are keeping a close eye on the rising risk profile of investing in Indonesia. Yesterday, CDS Indonesia with a 2-year tenor recorded the highest increase of up to 34.8% earlier in the week. Then followed by the 5-year CDS tenor which also increased, rising nearly 16% to the level of 107.42. The global economy, meanwhile, is affected by fears of a return to lockdown in Europe and the inability of Congress to approve more fiscal stimulus.

Moratelindo Offers IDR 723 Billion Sukuk Ijarah. Mora Telematika Indonesia (Moratelindo) plans to issue Moratelindo Phase III Sustainable Sukuk Ijarah I 2020 worth IDR 723 billion. Moratelindo offers two series, namely: Series A ijarah reward of IDR 208.25 billion with an annual installment reward of IDR 21.86 billion in ijarah and a 3-year tenor. Series B ijarah rewards IDR 56.15 billion with installments of IDR 6.31 billion ijarah benefits per year and a 5-year tenor. Meanwhile, the remaining amount of the remaining ijarah rewards offered is as much as IDR 458.59 billion in the sukuk ijarah series A and series B will be guaranteed on the best possible terms. The public offering of Islamic debt securities is part of the Public Offering of Moratelindo’s Sustainable Sukuk Ijarah I with a target of IDR 3 trillion. The Indonesian Securities Rating Agency (Pefindo) assigns an idA (sharia) rating to Moratelindo’s Islamic debt securities. Meanwhile, 75 percent of the proceeds from the issuance of the sukuk ijarah will be used for refinancing, and the remaining 25 percent will be used for backbone investment and access outside the existing network and ducting. (Bisnis Indonesia)

Covid-19 Pandemic Depressed the Sharia Financial Industry. The Minister of Finance said the Covid-19 pandemic had a massive impact on economic and social aspects. The performance of the Islamic finance industry before the pandemic period showed good performance, posting a market share of more than 5% last year. However, when the covid happened, the entire financial industry including banking and sharia banking made changes in the growth plan. On the other hand, the government responded to the pandemic through various fiscal policy instruments in handling pandemics and national economic recovery (PEN). Then, the government also provided massive assistance to the household sector and also to sharia-based small and medium enterprises (UKM) worth under IDR 10 billion. The government also provides relaxation of non-repayment loans for 6 months and is reduced by debt costs. (Investor Daily)

Interest of FR0086 and FR0087 amid rising CDS. Investors have the opportunity to return to interest in short tenors, amid the current volatility of the bond market. The short tenor liquidity factor is important, amidst the current volatility of the bond market. In nominal terms, both FR0086 and FR0087 are still small, so they are still in line with the government’s absorption trend. Investors can also look at the long tenors FR0083 and FR0076 which are currently in demand by foreign investors. A number of market players are interested in long tenors because they offer high yields amid the current trend of low interest rates. Yesterday, the rupiah exchange rate weakened 0.24% to IDR 14,700 / USD on the spot market. Meanwhile, BI’s middle rate weakened 0.3% to the level of IDR 14,723 / USD.

-REVIEW (Sept. 21, 2020)-
FR0081 (5yr): +0.5 Bps to 103.99 (5.52%)
FR0082 (10yr): -1.8 Bps to 101.07 (6.85%)
FR0080 (15yr): -1.9 Bps to 101.06 (7.37%)
FR0083 (20yr): +0.3 Bps to 100.88 (7.41%)

FR0086 (6yr): -1.1 Bps to 99.94 (5.51%)
FR0087 (11yr): +1.3 Bps to 97.92 (6.78%)

UST 2yr: -0.001 point to 0.13%
UST 5yr: -0.016 point to 0.26%
UST 10yr: -0.028 point to 0.66%
UST 30yr: -0.038 point to 1.41%
German Bund 10yr: -0.043 point to -0.53%
UK Gilt 10yr: -0.027 point to 0.15%

CDS 2yr: +34.77% to 46.43
CDS 5yr: +15.86% to 107.42
CDS 10yr: +6.01% to 168.80

WTI: -4.37% to USD39.31/Barrel
BRENT: -3.96% to USD41.44/Barrel
Source: Bloomberg