Wait and See, Investors Interested in FR0078. Government bond (Surat Utang Negara/ SUN) auction held on Tuesday (9/4) records offer IDR31.84Trn. The figure has decreased when compared with the previous SUN auction IDR59.50Trn.
Economist Samuel Sekuritas Indonesia Ahmad Mikail rate, there is a possibility of a decline in the value of the deals in the auction today is due to the worries of investors that Indonesia’s trade balance data in March threatened to back a deficit when it was released early weekend future. “Indonesia’s trade Balance deficit is estimated at around USD400Mn—USD500Mn, “he said.
This sentiment led some investors hesitant to enter Indonesia through the SUN auction. In addition, the decline in demand is also cause by the price of the SUN that’s been rate too high. As a result, the potential increase in the price of the SUN further tend to be limited in the future. From there, there needs to be an incentive that can push the price increase SUN so that investors get back interested in investing in the domestic bond market.
One of them is by lowering the interest rate reference. “But such options are still difficult to be realize in the near future,” said Mikail. However, worries investors believe only lasts a while. This is visible from the high pitches that go for the benchmark series 10-years FR0078 (Reopening) i.e. IDR8.94Trn. This series, became series with the highest incoming bid when the auction day.
According to Mikail, this indicates investors have already dare go into the series with a long tenor. That is, there is the confidence of investors that Indonesia could still bond market bullish in the coming time. Thus, when the auction bidding is reduce and more investors vied for the series raise short, this could be a sign of the existence of the negative sentiment that approach the domestic bond market.
In addition, other than FR0078, the Government also auction the series 3-months SPN03190710 (New Issuance), 12-months SPN12200410 (New Issuance), 5-years FR0077 (Reopening), 15-years FR0068 (Reopening), 20-years FR0079 (Reopening), and 30-years FR0076 (Reopening). The Government itself is still able to absorb funds above the indicative targets worth IDR15.70Trn.