Snapshot BII Report - 14 Apr 2015

Results: Government Conventional Bond Auction

Overview

Indonesian government conducted their conventional auctions today and received incoming bids of Rp10.01 tn bids versus its target issuance of Rp10.00 tn or came in similar to its target. Incoming bid during the auction was the worst (lowest incoming bids) since the start of this year. However, DMO only awarded Rp8.66 tn bids for its 7mo, 5y and 15y bonds. Incoming bids were mostly clustered on the 5y and 15y tenor. 7mo SPN was sold at a weighted average yield (WAY) of 5.99200%, 5y FR0069 at 7.24475% while 15y FR0071 was sold at 7.50983%. No bids were rejected during the auction. Bid-to-cover ratio on today’s auction came in at 1.11X – 1.22X. WAY during the auction came in higher compared to yesterday closing indicating investors were demanding for a cheaper price to buy the offered asset. Foreign incoming bids during the auction were noted Rp3.60 tn which was lower compared to Rp3.81 tn bids during previous auction.

The incoming bids were lower compared to our expectation while the awarded WAY was slightly higher above our expectation. However, we were not surprise with the result of the auction. Bank Indonesia Board of Governors meeting decided to halt its reference rate at 7.50% as well. As a result of the auction along with maintained reference rate, Indonesia bond market closed lower at the end of the day. Only Rp3.22 tn (37.2%) were awarded to foreign buyers.

Till the date of this report, Indonesian government has raised approx. Rp11.30 tn worth of debt through bond auction which represents 13.5% of the 2Q 15 target of Rp83.50 tn. On total, Indonesian government has raised approx. Rp191.4 tn worth of debt through domestic and global issuance which represent 42.4% of this year target of Rp451.8 tn.