Government Bonds
Market participants responded negatively, speculating that the Fed was starting to release a small portfolio of corporate bonds, which it bought during the Covid-19 pandemic. This, marked by a slight increase in the yield of the benchmark 10-year UST, rose from 1.47% to 1.48%. Yesterday, yields on FR0088 and FR0083 closed at 6.38% and 7.21, respectively, based on Fixed Income data from NH Korindo Sekuritas Indonesia.

Corporate Bonds
Mandatory Convertible KRAS Bonds Worth IDR 800 Billion. Krakatau Steel Tbk (KRAS) plans to issue Series B Compulsory Convertible Bonds (OWK) worth IDR 800 billion. This OWK is part of the mandatory convertible bond issuance that has been approved by the previous shareholders, with a maximum principal amount of IDR 3 trillion. Previously, KRAS had issued Series A OWK on 30 December 2020 amounting to IDR 2.2 trillion. (Kontan)

BPK: RI’s Debt Exceeds IMF Limit. The Indonesian Supreme Audit Agency (BPK) has warned the government regarding debt increases during the COVID-19 pandemic. This is because Indonesia’s debt vulnerability in 2020 has exceeded the limits recommended by the International Monetary Fund (IMF) and/or International Debt Relief (IDR). The results of the BPK’s examination of the 2020 Central Government Financial Report (LHP LKPP) showed the debt service ratio to revenue had reached 46.77%. This figure exceeds the IMF’s recommendation of 25-35%. In addition, the ratio of interest payments to receipts has reached 19.06%, exceeding the IDR recommendation of 7-10%. (Reuters)

Temporary spike in US inflation. Market participants are paying close attention to the Fed chairman’s statement that the increase in US inflation will be temporary. This statement emphasizes that the US economy is strengthening, even though it is still affected by the Covid-19 pandemic. This has the opportunity to put pressure on the SUN market again, following speculation that tapering has begun. In the short term, market participants can keep a close eye on FR0086, FR0087, FR0081, and PBS030.