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Wednesday, November 4, 2009

Return of RI global bonds the lowest in Asia: Government rakes IDR3.55 trillion from SUN tender

photo from

as published in Bisnis Indonesia daily newspaper
Rabu, 04/11/2009 00:00 WIB
Return of RI global bonds the lowest in Asia
Government rakes IDR3.55 trillion from SUN tender

JAKARTA: The return of the Indonesian government bonds (SUN) in October 2009 stood at -1.09 percent or the lowest among the 12 Asian countries but Japan.

Data released by HSBC Holdings Plc mentions the highest bond return was given by Sri Lanka of 3.51 percent, then Pakistan 2.68 percent, India 1.07 percent ans Vietnam 1.02 percent.

Director General of Debt Management - Department of Finance Rahmat Waluyanto said the return is influenced by the risk perception of a promissory note. If Indonesian bond return is low or drastically declining, it implies the risk perception of foreign exchange SUN declined.

"Return here shows that the Indonesian government bonds risk perception is low. This is proved by the rating given by the Moody's Investors Service and S&P [Standard & Poor's] which improve the rating outlook as of stable into positive rating," he said to Bisnis yesterday.

The low risk perception then leads to the inflow of overseas capital to government bonds market so as to increase the price and capital gain and plunge the return.

Based on the data of the directorate, the total overseas possession of the government bonds in October 2009 rose up to IDR8.39 trillion into IDR101.62 trillion from September IDR93.23 trillion.

The data last week mentions the soaring overseas ownership went along with the growing government bond traded from IDR567.37 trillion end of September into IDR574.97 per October 29.

As from IDR574.97 trillion, bank owns IDR256.09 trillion, BI IDR23.21 trillion, mutual fund IDR44.20 trillion, insurance IDR70.50 trillion and pension fund IDR37.56 trillion, securities IDR640 billion, and other parties IDR41.15 trillion.

Bond analyst of PT Trimegah Securities Tbk Ariawan said the overseas investors placing their funds on global bonds have long term investment horizon and thus the trade is not liquid.

Yesterday the government sold three series of SUN worth IDR3.55 trillion as from four bonds series offered. The incoming bid stood at IDR5.14 trillion. the number of divested SUN was higher than the indicative target of the government's formerly set target of IDR3 trillion.

Yield set by the government for FR0036 series is 10.25 percent, FR0044 at 10.65 percent, and FR0052 in 10.76953 percent.

Ariawan said the tender was successful noting that the bidders called for relatively low yield so the government could sell the investment instrument here in large quantities.

The tender yesterday could minimize negative sentiment among investors and bolster SUN price with potential pressure to the yield by 5-10 bps up to next weekend. (Bisnis/rni/21)



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