The decline in Cadev depresses SUN prices. The closing price of SUN on Wednesday was relatively weak. The rupiah is influenced by domestic sentiment on foreign exchange reserves (cadev) and the action against the Job Creation Act. In terms of yield, all benchmark SUN experienced a rise in yield, with the benchmark FR0082 10-year tenor rising 1.4 bps to 6.87%. Cadev Indonesia for the September 2020 period fell by almost USD 2 billion from the previous month. Bank Indonesia (BI) reported that cadev at the end of last month was worth USD 135.2 billion, down from USD 137 billion in the previous month. This decline was influenced by the payment of government external debt and the need to stabilize the rupiah exchange rate. Apart from that, yesterday’s bond market movement was also influenced by the pros and cons of ratifying the Ciptaker Law by the DPR. It is feared that this action will disrupt domestic stability, which will make foreign investors cautious about investing in Indonesia.

WSKT Receives IDR 14 Trillion. Waskita Karya Tbk (WSKT) has the opportunity to get IDR 14 trillion in cash in 4Q20. As of August 2020, Waskita Karya has recorded cash receipts from the project term of around IDR 14 trillion. Meanwhile, the company will use internal cash sourced from project payments and bank funding to pay off the loan facility from BNI. Currently, Waskita Karya is participating in a project tender with a total value of around IDR 12 trillion and it is hoped that the contract will be obtained in the rest of this year. Waskita Karya is also still eyeing several toll road and pipeline projects with a total value of up to IDR 14 trillion. For the record, WSKT received a loan facility from Bank Negara Indonesia (BNI) amounting to IDR 2 trillion. The loan facility will be used to pay off the bonds that will mature on October 6, 2020 and October 16, 2020. The bonds in question are the Sustainable Bonds I Phase II Year 2015 Series B worth IDR 1.15 trillion with an interest of 11.1% and Continuous Bonds III Phase I Year 2017 Series A worth IDR 1.37 trillion with an interest rate of 8%. The loan facility value bears interest of 9.5% with a 6-month loan term from the date of the loan agreement. (Kontan)

External Fluctuations Affected Cadev September 2020. After scoring a record high of USD 137.0 billion, Indonesia’s foreign exchange reserves (cadev) in September 2020 began to decline. Bank Indonesia (BI) noted that the position of foreign exchange reserves in September 2020 was USD 135.2 billion or decreased by USD 1.8 billion from the position in August 2020. The decline in foreign exchange reserves in the reporting month was due to external conditions that depressed the rupiah exchange rate and make central bank intervention increase. External sentiment such as elections in the United States (US), and foreign investors’ capital outflow. From within the country, the still high number of Covid-19 cases affected economic movements. In September 2020, the rupiah was in the range of IDR 14,900 / USD. The movement of foreign exchange reserves was still influenced by external turmoil which was also influenced by the Covid-19 conditions. (Kontan)

Investors Pay Attention to US Monetary Policy. This sentiment will influence the movement of the rupiah. The Fed will release the minutes of the FOMC meeting on Thursday (08/10) Indonesian time, which projects that the Fed’s stance will still be dovish. The US Central Bank is projected to keep interest rates low until 2023. This dovish attitude has the opportunity to strengthen the rupiah. Until now, polls have shown that the Democrats are still ahead, pressing the US dollar exchange rate as a safe haven. In the short term, investors can again take advantage of selective buying action FR0086 and FR0087 which are close to 7% yield.

-REVIEW (Okt. 7, 2020)-
FR0081 (5yr): +2.5 Bps to 103.00 (5.75%)
FR0082 (10yr): +1.4 Bps to 100.86 (6.87%)
FR0080 (15yr): +1.8 Bps to 100.87 (7.39%)
FR0083 (20yr): +0.7 Bps to 100.91 (7.41%)

FR0086 (6yr): +1.8 Bps to 98.99 (5.71%)
FR0087 (11yr): +2.5 Bps to 97.44 (6.84%)

UST 2yr: +0.005 point to 0.15%
UST 5yr: +0.031 point to 0.34%
UST 10yr: +0.052 point to 0.78%
UST 30yr: +0.050 point to 1.58%
German Bund 10yr: +0.014 point to -0.49%
UK Gilt 10yr: +0.016 point to 0.30%

CDS 2yr: -0.43% to 42.33
CDS 5yr: -1.28% to 103.29
CDS 10yr: -0.33% to 166.06

WTI: -1.77% to USD39.95/Barrel
BRENT: -1.54% to USD41.99/Barrel
Source: Bloomberg