CIMB IDR Weekly Fixed Income Market Commentary ended 17 April 2014

Good Afternoon,
Attached is our weekly commentary dated 17 April 2014

·         The government bond market moved in narrow range last week amidst lacking of strong local drivers. In a week, shorter dated papers ended with little gains, whilst longer dated series booked small losses. Players seemed taking wait-and-see stance after legislative election, whilst waiting the political parties to take the next step post election result.
·         Trading activities declined last week, as average daily volume dropped to IDR7.83 trillion from IDR11.60 trillion recorded in the previous week. We noted that 3-year SR006 was still actively transacted in the secondary market as some players preferred shorter dated papers. Meanwhile, the benchmark series were relatively thinly traded.
·         The government held conventional bond auction last week and absorbed funds totaling IDR8 trillion, exactly the same amount with the initial target. However, players’ appetite was relatively low, as incoming bids reached IDR15.15 trillion only, the lowest this year. We calculated that the government has issued IDR184.5 trillion or 51.68% of total target issuance this year.
·         This week, the bond market may still hover from its current level. Players are believed to take conservative stance as there is little market driver. They are also waiting further step taken by political parties.
·         In addition, the government plans to conduct sukuk auction with an indicative target of IDR1.50 trillion. There are four series at the auction, comprising of one SPN series and three PBS series.
·         The credit market booked moderate trading value with average daily volume of IDR436 billion, around previous week’s volume. Meanwhile, players showed their interest along high rated bonds such as AAA and AA+ rated segments, and recorded more than 60% of total volume in the week.
 
Kind Regards,
CIMB Fixed Income Team
 
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