Indonesia Goverment & Corporate Bond Price Bullish. The price of the government bond series 10-years have increase more than 5% since plunging to the lowest point on October 15, 2018 become 87.9% of the 82%, in line with the strengthening of the bond market amid high interest rates regime.
The current price increase has reached a level that almost match the position since August last year. Lowest price point becomes the reference point is the position of the lowest prices in government bond (SUN) series of reference 10-years since January 2016.
The long term service shows global conditions improved in comparison with the period October 2018 at which that time US-China trade war is still high, trimming projected the global economy by the IMF, and the weakening of the rupiah. Refinitiv data shows the price increase occurs as many as 529 Bps, which is also accompanied by a decrease in the yield rate (yield) of 105 Bps be 7.8% of 8.85%.
From the above data it appears that the movement of the SUN yield a tenor of 10-years showed the lowest position ever reached 7.8% in February, and the strengthening of today are already heading to the lowest position. The price movement and mutually contradictory bonds yield in the secondary market. Quantity 100 Bps equivalent 1%.
Yield is also more commonly made of reference transaction price than bonds because it reflects the coupons, the tenor, and the risks in one number. SUN is a government bond (SBN) conventional rupiah trading heaviest in the domestic market, so that it can reflect the conditions of the bond market in general.
FR0078, 10-years series raised into one of the four series that became the reference market, along with the FR0077 5-years series, FR0068 15-years, and FR0079 20-years series raised. The series of reference is determined each year.
Demetrius Ari Pitojo, Chief Investment Officer Eastspring Investments Indonesia, said investments increase in prices show still draw it SUN in the eyes of investors amid a high reference interest rates in Indonesia. “Because of interest rates, so the SUN is still attractive, “he said in Indonesia (13/3/19).
He added, the bond market can still be strengthened again this year if the reference interest rate of Bank Indonesia lowered, given last year’s rise in interest rates of 7-Days Reverse Repo Rate (7DRRR) by as much as 6 times in 1 year. The SUN also increases data accompanied by rising prices of corporate bonds.
The rise in the prices of corporate bonds are less liquid than the SUN reflected from the movement of INDOBeX Corporate Total Return from Indonesia Bond Pricing Index (IBPA) rose 7.92% to 272 of 252 in the same period with the SUN yesteryear. Dimas Yusuf, Investment Specialist Sucorinvest Asset Management, says the rise in INDOBeX Corporate Total Return does indeed reflect the corporate bond market that already feels increased since last month.
“Demand for corporate bonds are high. “Director of Indonesia Bond Pricing Agency (IBPA) Wahyu Trenggono said rebounding bond market is more driven by the steps the US Central Bank, The Fed, which started giving signals dovish related policies the Fed Funds Rate (FFR) this year. “(Also affected) the policy of the central banks of other countries that tend to loose.
Since the beginning of the year, sentiment pressure down US-China trade war also sparked a rally in the market until February. “In addition, he said, the country’s bond market trends and corporate debt markets are indeed mutually hand in hand and simultaneously increase.
Morgan Stanley, a global investment bank, predicted Indonesia bond market conditions will be improved entered the 3Q19 when Bank Indonesia predicted began lowering interest rates, which is certainly a reference could trigger further increases for the price bonds rupiah. Morgan Stanley even suggest for investors to buy government bonds, 10-year tenor of the rupiah because the interest rates decline predictions already coupled with the Indonesia’s macroeconomic conditions improve.
At the end of this week, Friday (15/3/2019), Indonesia trade balance data triggered a strengthening bond market amid global market conducive. The rise in the price of the SUN it is not similar with the correction is happening in the bond market developing country Governments in the other.
Refinitiv data shows a rise of the price of the SUN was reflected in the four series of reference (benchmark) and decreases the level of return the result (yield). Series reference for the most strengthened today is FR0068 who raised 15-years with declining yield 8.8 bps to 8.12%. Quantity 100 bps is equivalent to 1%.
Trade balance data is announced with a note which is way above the predictions of market participants and turned from a deficit that occurred during the last four months into a surplus. The more successful these data encourage the repair price of SUN on the market.