An Attractive Yield amidst Bank Indonesia Maintain its BI 7-DRR. Directorate General of Budget Financing and Risk Management (DJPPR) Ministry of Finance, has organized an auction of sharia government bond (SBSN) or sukuk on Tuesday (19/3).
In an auction this time around, the Government managed to absorb the funds of IDR8.98Trn of the total offer IDR29.69Trn. Pemeringkat Efek Indonesia (Pefindo) Economist, Fikri C. Permana, sees its primary cause because the dovish signal from the Fed that makes Bank Indonesia (BI) maintains its interest rates see or BI 7-DRR remain at a level of 6%.
So, it’s likely the investors be looking forwards and try to maximize their yield before BI lower interest rates which will also result in a decrease in yield. Fikri argue from within the country it is also encouraged by the low inflation makes the value yield sukuk are very competitive. While from external factors, while this sukuk is still very interesting at least if compared to countries that have the same rating.
According to DJPPR data release, SBSN PBS014 series earns the highest incoming supply i.e. IDR13,90Trn and IDR4.8Trn won. The series is due on May 15, 2019 has a weighted average yield won of 7.28%. According to Fikri, PBS014 became an attractive because it is driven by a high investor interest because of the combined internal and external factors. Therefore the behaviour of the Ministry of finance in order to lower the cost of fund of sukuk. Which to make future payments when the load can also be more pressed.
On the other hand, different from previous auctions, long-tenor sukuk this time absorbed by the Government. Fikri see the behavior of the Ministry of Finance through DJPPR with risk sharing by dividing duration government bond (SUN) and government sukuk (SBSN) so that the load mass up front can be more awake. It is also useful to reduce the pressure of mass polarization front against Indonesia’s financial markets through Sukuk or SUN. In addition if at any time a foreign capital outflow occurs the Government and investors in the country able to subjugate them and volatility can be reduced.