Indonesian government conducted their sukuk auctions yesterday and received incoming bids of Rp21.36 tn bids versus its target issuance of Rp4.00 tn or oversubscribed by 5.34x. Incoming bids during the auction was noted the highest since begin year and was higher by almost tripled compared to the last sukuk auction held on 28 Jun. The bids were also higher by approx. 186% compared to YTD average incoming bids during sukuk auction amounting Rp11.47 tn. However, DMO only awarded Rp5.42 tn bids for its 5mo, 2y, 4y and 7y bonds. Incoming bids were mostly clustered on the PBS009 and PBS006 series. 5mo SPN-S was sold at a weighted average yield (WAY) of 6.10531%, 2y PBS009 was sold at 6.64061%, 4y PBS006 was sold at 7.03119% while 7y PBS011 was sold at 7.42857%. PBS012 series bids were rejected during the auction. Bid-to-cover ratio during the auction came in at 2.75X – 5.76X.
Till the date of this report, Indonesian government has raised approx. Rp23.42 tn worth of debt through bond auction which represents 26.6% of the 3Q 16 target of Rp88.00 tn. On total, Indonesian government has raised approx. Rp483.3 tn worth of debt through domestic and global issuance which represent 80.7% of this year target of Rp599.0 tn. Assuming that if Indonesia government issues Rp4.00 tn during every sukuk auction in 2Q 16 then the Government needs to issue Rp9.72 tn during every conventional auction (5 upcoming conventional auction in 3Q 16) to meet their target of Rp88.00 tn.