Snapshot BII Report - 16 June 2015

Results: Government Sukuk Bond Auction

Overview

Indonesian government conducted their sukuk auctions yesterday and received incoming bids of Rp4.47 tn bids versus its target issuance of Rp2.00 tn or oversubscribed by 2.2x in line with our view. However, DMO only awarded Rp2.69 tn bids for its 1y, 5y and 25y bonds. Incoming bids were mostly clustered on the short end tenors. 1yr PBS008 was sold at a weighted average yield (WAY) of 7.81466%, 5y PBS006 at 8.67790% while 25y PBS007 was sold at 9.19000%. These figures were higher than our expectation. SPN-S04122015 bids were rejected during the auction. Bid-to-cover ratio during the auction came in at 1.03X – 1.32X.

Till the date of this report, Indonesian government has raised approx. Rp61.02 tn worth of debt through bond auction which represents 73.1% of the 2Q 15 target of Rp83.50 tn. On total, Indonesian government has raised approx. Rp267.6 tn worth of debt through domestic and global issuance which represent 59.2% of this year target of Rp451.8 tn. Assuming that if Indonesia government issues Rp2.00 tn during final sukuk auction in 2Q 15 then the Government needs to issue Rp20.48 tn during the final conventional auction (1 upcoming conventional auction in 2Q 15) to meet their target of Rp83.50 tn.