Snapshot BII Report - 23 June 2015

Results: Government Conventional Bond Auction

Overview

Indonesian government conducted their conventional auctions and received incoming bids of Rp40.01 tn bids versus its target issuance of Rp12.00 tn or oversubscribed by 3.3x. However, DMO only awarded Rp18.00 tn bids for its 8mo, 6y, 11y, 15y and 20y bonds. Incoming bids were mostly clustered on the FR0056 (11y). 8mo SPN was sold at a weighted average yield (WAY) of 6.69921%, 6y FR0053 at 8.24853%, 11y FR0056 at 8.36990%, 15y FR0071 at 8.42989% while 20y FR0068 was sold at 8.53585%. No bids were rejected during the auction. Bid-to-cover ratio during the auction came in at 1.11X – 4.20X.

Heavy demand occurred as DMO offered FR0053 and FR0056 series during today’s auction. FR0053 and FR0056 series is expected to be the upcoming 5y and 10y benchmark series in 2016. As a result, investors started to collect these series to add to their portfolio. Foreign incoming bids during the auction were noted Rp13.69 tn or 34.2% of total incoming bids. However, only Rp6.33 tn bid (35.2% of total awarded bids) were awarded to foreign investors. Going further, 1Q 15 U.S. GDP data publication would be the main event for further either positive/negative sentiment in Indonesia bond market till the end of this week.

Till the date of this report, Indonesian government has raised approx. Rp79.02 tn worth of debt through bond auction which represents 94.6% of the 2Q 15 target of Rp83.50 tn. On total, Indonesian government has raised approx. Rp285.6 tn worth of debt through domestic and global issuance which represent 63.2% of this year target of Rp451.8 tn. DMO needs to issues Rp4.48 tn during final sukuk auction in 2Q 15 to meet their target of Rp83.50 tn.