Transitional PSBB positive sentiment, encouraging SUN strengthening. Prices for the benchmark series of Government Securities (SUN) on Monday (12/10) were all closed higher, in line with the implementation of Large-Scale Social Restrictions (PSBB) DKI Jakarta which returned to the PSBB during the transition period. The majority of SUN were heavily traded by investors yesterday, with FR0081 and FR0082 recording a decline in yield of 1.3 bps respectively to 5.73% and 6.86%. On the other hand, investors are keeping a close eye on the initial sukuk auction for the 4Q20 period, amid a decline in foreign exchange reserves. Market players are paying close attention to Bank Indonesia (BI) ‘s ability to absorb sukuk auctions, because so far BI has been mostly an investor who should have been a standby buyer.

QnB Indonesia Issues IDR 448 Billion Bonds. Bank QnB Indonesia Tbk issues bonds through a sustainable public offering (PUB) I Phase III Year 2020 amounting to IDR 448 billion with a coupon of 6.25% per year and a tenor of 367 days. All funds will be used by the company as working capital for business development in the form of credit expansion. The target for raising funds from PUB I bonds is IDR 1 trillion. Previously, the company had issued PUB I Phase I and II Year 2019, amounting to IDR 100 billion and IDR 452 billion, respectively. In order to issue bonds, the company has received a rating for long-term debt securities AAA (triple A) from PT Fitch Ratings Indonesia (Fitch). Meanwhile, the public offering period is on October 22-26, electronic distribution on November 3, and the date of listing on the IDX is estimated to be November 4, 2020. (Investor Daily)

Tax Revenue Grows 8%. Head of the Fiscal Policy Agency (BKF) Febrio Kacaribu said next year’s tax revenue target should be able to grow 8%. This figure calculates the 2021 economic growth target of 5% and inflation of 3%. Based on data from the Ministry of Finance, the contribution of the manufacturing sector to national GDP in 2019 reached 20.5%. Meanwhile, its contribution to tax revenue was 27.4%. Then, the trade sector contributed 13.6% to GDP and 18.67% to tax revenue. Then, the contribution of the agricultural sector to tax revenue in 2019 was 1.34%, far from the contribution of the agricultural sector to 2019 GDP which reached 13.3%. Likewise with the construction and real estate sectors with a contribution to 2019 tax revenue of 6.77% with a contribution to GDP in the same year reaching 14.1%. Thus, there are sectors that have a large tax burden, such as manufacturing and trade. Then there are those whose contribution is relatively low, such as the agricultural sector as well as construction and real estate. (Kontan)

4Q20 Prime Sukuk Auction, amidst Omibus Law Sentiment. Initial sukuk auction with an indicative target of IDR 10 trillion is projected to be achieved. Although, the movement of Government Securities (SBN) this week is influenced by the sentiment of the Omnibus Law on the Job Creation Law which is still continuing. This target will be achieved, supported by the current profile of investors, the majority of whom are domestic, such as banking, taspen and insurance, which still have high liquidity. Meanwhile, external sentiment and stimulus provided by the US government could lower yield prices globally. Today, the government will auction 5 series of sukuk, namely: SPNS 14042021 (new issuance), PBS027 (reopening), PBS026 (reopening), PBS025 (reopening), and PBS028 (reopening). On the other hand, we see no positive impact from the omnibus law on the sukuk market. However, we are more concerned about the decline in the position of foreign reserves. BI’s ability to absorb sukuk auctions will be limited, because so far BI has been mostly an investor who should be a standby buyer.

-REVIEW (Okt. 12, 2020)-
FR0081 (5yr): -1.3 Bps to 103.09 (5.73%)
FR0082 (10yr): -1.3 Bps to 100.95 (6.86%)
FR0080 (15yr): -0.6 Bps to 100.96 (7.38%)
FR0083 (20yr): -0.1 Bps to 100.99 (7.40%)

FR0086 (6yr): -2.1 Bps to 99.08 (5.69%)
FR0087 (11yr): -0.2 Bps to 97.64 (6.82%)

UST 2yr: -0.000 point to 0.15%
UST 5yr: -0.000 point to 0.33%
UST 10yr: -0.000 point to 0.77%
UST 30yr: -0.000 point to 1.57%
German Bund 10yr: -0.017 point to -0.54%
UK Gilt 10yr: -0.009 point to 0.27%

CDS 2yr: -0.70% to 40.62
CDS 5yr: -2.00% to 92.54
CDS 10yr: -0.64% to 156.89

WTI: -2.88% to USD39.43/Barrel
BRENT: -2.63% to USD41.72/Barrel
Source: Bloomberg