Undersubscribed, the government implemented a Green Shoe Option. Apart from the low interest in PBS003, the government only won yesterday’s Sukuk auction worth IDR 6.4 trillion or below the indicative target of IDR 10 trillion. The small payoff of 6%, and the illiquid PBS003, has made investors more interested in the payoff from 6.50% (PBS027) to 8.375% (PBS025) in the last 3Q20 sukuk auction. As a follow-up to the low auction results, the government conducted an additional auction (green shoe option) today. Meanwhile, the government is again offering the PBS027, PBS026, PBS025, and PBS028 series in this auction.

Jasa Marga Releases IDR 1 Trillion SBK. Jasa Marga Tbk (JSMR) will issue commercial securities (SBK) worth IDR 1 trillion. The proceeds from the issuance will be used by the company to improve its cash flow in the short term. SBK is offered with a discounted interest scheme of 6% -7% per annum. Meanwhile, the tenor reaches 12-months from the date of issuance of the SBK or the date of redemption on October 13, 2021. Jasa Marga’s SBK has received an A1 + rating from the Indonesian Securities Rating Agency (Pefindo). As planned, the SBK offering period has been running from 18 September 2020 to 7 October 2020. Meanwhile, payments from investors to Jasa Marga and electronic distribution at the Indonesian Central Securities Depository (KSEI) are scheduled for 14 October 2020. Meanwhile, the date of obtaining approval from Bank Indonesia has been obtained since 17 September 2020. (Investor Daily)

World Bank revised Indonesia’s economic growth projection. World Bank downwardly revised Indonesia’s economic growth projection for this year, from 0% in last June to a contraction of -1.6% to -2% YoY. The World Bank argues that Indonesia’s economic contraction occurred because the handling of the pandemic in terms of health was not optimal. According to the World Bank, Indonesia is one of the countries in the Asia Pacific region that has yet to show signs of economic recovery in the near future. The large-scale social restrictions (PSBB) policy implemented by the local government was less effective. So that it worsens the outlook for Indonesia’s economic recovery. As a result, the World Bank predicts Indonesia’s economic recovery will be slower than other countries in the Asia Pacific region. The economies in Asia Pacific countries such as the Philippines have started to run, although the pressure of global demand sentiment has still colored this year. Meanwhile, the World Bank predicts that the economies of countries in the Asia Pacific region will contract by an average of -0.9% to -3.5% by the end of this year. (Kontan)

PBS003 is not offered at the Green Shoe Option auction. Investors can look at the short tenor sukuk PBS027 and PBS026 which the government won at yesterday’s auction. Short-term funding needs, made the two series won a lot. The government won the PBS027 series worth IDR 1.2 trillion (bid to cover ratio 1.81x), and PBS026 IDR 1.6 trillion (bid to cover ratio 1.87x). On the other hand, investors can expect higher yields on PBS027 and PBS026, namely recording the weighted average yields at the level of 4.56% and 5.29%, respectively. The yield was 3 bps to 7 bps higher than the sukuk auction in mid-September 2020, which was at 4.53% and 5.22% levels. In addition, the government did not offer PBS003 at this additional sukuk auction, due to low investor interest in this series. Yesterday, the rupiah strengthened slightly by 0.03% to IDR 14,895 / USD on the spot market. Meanwhile, the JISDOR exchange rate strengthened 0.26% to the level of IDR 14,920 / USD.

-REVIEW (Sept. 29, 2020)-
FR0081 (5yr): +5.8 Bps to 103.34 (5.67%)
FR0082 (10yr): +3.4 Bps to 100.59 (6.91%)
FR0080 (15yr): +1.3 Bps to 100.75 (7.41%)
FR0083 (20yr): +0.5 Bps to 100.69 (7.43%)

FR0086 (6yr): +1.8 Bps to 99.51 (5.60%)
FR0087 (11yr): +0.6 Bps to 97.62 (6.82%)

UST 2yr: -0.001 point to 0.12%
UST 5yr: -0.003 point to 0.25%
UST 10yr: -0.004 point to 0.65%
UST 30yr: +0.000 point to 1.41%
German Bund 10yr: -0.018 point to -0.54%
UK Gilt 10yr: -0.019 point to 0.18%

CDS 2yr: +0.78% to 50.29
CDS 5yr: -0.06% to 116.25
CDS 10yr: +0.59% to 179.43

WTI: -3.22% to USD39.29/Barrel
BRENT: -3.29% to USD41.03/Barrel
Source: Bloomberg