Indonesia government bond market
closed much weaker last week, as the yield curve shifted upward by about 20 to
40 bps, with heavier losses posted along the curve bellies. Strong US labor
market, higher global crude oil price and weaker Rupiah mainly drove the
sell-off activities in the bond market. Trading volume eased slightly to about
IDR 14.24 trillion per day, from IDR 15.79 trillion recorded in previous week.
Government conducted an Islamic bond auction last week and absorbed IDR 2.32 trillion from incoming bid amounting IDR 11.62 trillion. Investors still preferred the short maturity bonds such 6-month T-bills and PBS08 (maturing in June’16). At this moment, the government has issued total IDR 109.7 trillion year-to-date out of annual gross target of IDR 431 trillion. The weighted average yield was 5.84% and 6.89% for 6-month T-bills and PBS08 respectively.
This week government will conduct a regular bond auction with indicative target of IDR 16 trillion. Government offers 12-month T-bills and also FR70 (maturing in 2024) and FR68 (maturing in 2034).
Higher Indonesia bond yields and weaker US retail sales and consumer confidence could support domestic bond market this week. Narrowing spread between IRS and government bond yield could be positive to bond market. Higher crude oil price has an adverse impact towards Indonesia’s trade balance as Indonesia is a net oil importer. We think that market could rebound this week.
In the credit market we saw thin activity with average volume per day only about IDR 469 billion. Market was dominated by AAA rated bonds. Market increased their trades of 0 to 3 year maturity and sharply reduced the trades of above 5 year maturity. Meanwhile, Adira Finance May’15 (AAA) was dominant last week and transacted IDR 168 billion in volume.
Government conducted an Islamic bond auction last week and absorbed IDR 2.32 trillion from incoming bid amounting IDR 11.62 trillion. Investors still preferred the short maturity bonds such 6-month T-bills and PBS08 (maturing in June’16). At this moment, the government has issued total IDR 109.7 trillion year-to-date out of annual gross target of IDR 431 trillion. The weighted average yield was 5.84% and 6.89% for 6-month T-bills and PBS08 respectively.
This week government will conduct a regular bond auction with indicative target of IDR 16 trillion. Government offers 12-month T-bills and also FR70 (maturing in 2024) and FR68 (maturing in 2034).
Higher Indonesia bond yields and weaker US retail sales and consumer confidence could support domestic bond market this week. Narrowing spread between IRS and government bond yield could be positive to bond market. Higher crude oil price has an adverse impact towards Indonesia’s trade balance as Indonesia is a net oil importer. We think that market could rebound this week.
In the credit market we saw thin activity with average volume per day only about IDR 469 billion. Market was dominated by AAA rated bonds. Market increased their trades of 0 to 3 year maturity and sharply reduced the trades of above 5 year maturity. Meanwhile, Adira Finance May’15 (AAA) was dominant last week and transacted IDR 168 billion in volume.
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