Thursday, 14 August 2014


The Government on Tuesday [15/7] planned to run sales offering of Syariah Promisory Notes [SBSN] or Project-based Sukuk namely series PB5005 for re-opening. Besides there would also auction for State Syariah Promissory Notes series SPN-S 02012015 for re-opening.

Meanwhile this weekend the stockmarket strengthened in line with market’s electoral euphoria, but it tend to weaken toward weekend in line with act of profit-taking. The majority shares posted downturn of yield – but some of them posted increase of yield, among other short tenure of 3 to 4 years and long tenure of 21 to 30 years.

It we seen that Government bond benchmark series FR0068 of 20 years tenure had strengthening price of 0.68 basic points Similary FR0070 of 10 years tenure posted increase of 78.41 bps. The Government on Tuesday [8/7] had run action for SUN SPN12141009 [re-opening], SPN12150710 [new issuance], FR0069 [re-opening] FR0071 [re opening] and FR0068 [re-opening] with total offering of Rp22.29 trillion.

The biggest offer received for FR0071 amounting to Rp7.75 trillion with highest yield of 8.75% and lowest 8.5%. On the other hand of the lowest yield offered to SPN12141009 worth 5.40% and highest yield FR 9968 worth 9.04%. By the Government, the average yield and total of competitive nominal won by each respective series, i.e. SPN12141009 [5.62%] with nominal won Rp1 trillion, SPN12150710 [6.74%] with nominal won Rp1 trillion.

Besides FR0069 [7.80%] with nominal won R 2.35 trillion, FR0071 [8.55%] with nominal won Rp5.60 trillion and FR0068 [8.80%] with nominal won Rp3.88 trillion. Of the total offering that entered, the Government absorbed Rp15 trillion or bigger than SUN action worth Rp8.35 trillion with entering offer Rp13.81 trillion.

The Director of PT PHEI Wahyu Trenggono stated that today there were around 500 bond series, Government or Corporate, while in other Southeast Asian countries the bond series issued came to 3,000 series. For Indonesia the volume of bond trading was only Rp63 billion in volume. One bond serie was trade 3 times in a year.

To make bonds attractive to investors, the number of corporate which issued bond, coupons must be increased. The more bonds, the easier it was for investment managers to offer products to the people. In Indonesia, most of the bonds offered were with fix rate coupons compared to zero coupon bonds. “If there was only few choice they would be kept lest there would be no other choice” he said.

Admittedly the bonds which had always functioned as trading instruments was still little. Most of the bonds were Government owned.

“Most of the bond series accumulated in the bond market were not liquid” The Director of PT PHEI Wahyu Trenggono stated in Jakarta on the occasion of Journalist Education Session in Jakarta on Monday [14/7].

Wahyu explained that the number of bonds of the private sector being trade was only 6%, Meaning corporate bonds which constituted 95% of total bonds were not trade and therefore not liquid. The bonds mostly traded were Government bonds; 26% of bonds being traded were Government bonds. Besides, Wahyu said, yield 2014 above 6% and in 2013 around 3%. “This was due to Tappering Off run by the Fed and deficit in current transaction,” he said.

Meanwhile America bonds were starting to freeze after moving up in the last 5 days toward retail sales data and industrial production which was predicated to repeat positive trend of yield of 10 year tenure bonds now at 4 basic points of the lowest level since early June 2014. Such reflected stabilization Europe started in Portugal’s second biggest bank Banco Espirito Santo SA.

Not just that, Asian shares and fixed US shares was seen to strengthen before Janet Yellen made testimonial. As planed Yellen would speak before the Senate Banking Committee on Tuesday [15/7] and House Committee of Financial Service on Wednesday [16/7] in regard to the prospect of monetary policy.

Investors were drifting their attention from Banco Espirito SA to Yellen’s speech who signaled she was able to cool off crisis aftermath with monetary normalization. Yellen’s speech at the US Parliament means global financial issue would the Fed end Quantitative Easing after the Financial Crisis

The ten year bond yield annual reference increased by 1 basic point or 0.01% to become 2.5% in London. US Bond with long term tenure 2.5% which would be due on May 2024 down to 99% Survey of Bloomberg news had it that retail sales could increase by 0.6% in June this year against previous year after being elevated by 0.3% in May 2014. Besides industrial production would also increase by 0.3% following 0.6% increase the month before. (SS)

Business New - July 18, 2014

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