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Government Bond Performance 120 Bps Higher

By administrator | July 8, 2019 | Finance.
Government Bond Performance 120 Bps Higher

Government Bond Performance 120 Bps Higher

Government Bond Performance 120 Bps Higher. Government Bond Securities (Surat Utang Negara, SUN) are able to provide higher returns than corporate bonds amid current market volatility. Based on the Indonesia Bond Pricing Agency (IBPA), INDOBeX Government Total Return recorded a growth of 9.17% YtD to the level 258.18 on Friday (5/7). This yield is higher 120 Bps than compared to INDOBeX Corporation Total Return which rises 7.91% YtD to level 283.64. SUN’s liquidity is better, making it able to move volatile in terms of price and yield.

This brings its own advantages, post SUN prices can rise significantly and faster than corporate bonds, as domestic bond markets are filled with positive sentiments, especially external sentiments.

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External positive sentiment for the Indonesian bonds market, for the bond markets such as the growing expectations of US benchmark interest rates. As a result, the bond market got a stimulus one of the funds of foreign investors who re-inflows. For the record, the heat of capital inflow makes the value of foreign ownership in the government bonds market up to IDR991.06Trn as of 4 July. Government bonds respond quickly to changing market conditions.

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On the other hand, corporate bonds are relatively rarely trade on the secondary market. The value of foreign ownership in corporate bonds is not as much as SUN. Price movements and corporate bond yield are not severely influence by external sentiments. The performance growth of the instrument’s index tends to be slow. On the other hand, the influence of this characteristic also corporate bonds. It can be more durable when the market conditions deteriorate.

This has happened in the last May period when the corporate bond index noted superior performance than the government bond index. At that time, the Indonesian bond market was in the middle of high volatility.

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