SBI restricted, SUN price mounted: Corporate bond emitter to get benefited

Friday, 18/06/2010 00:00 WIB

SBI restricted, SUN price mounted: Corporate bond emitter to get benefited

Irvin Avriano A.

Bisnis Indonesia

JAKARTA: The restriction of investment period at the BI promissory notes lead to the much more fund flowing to bond market and mounting the government bonds (SUN) pricing.

The SUN price index the last three weeks sharply jumped by 357 basis points. Data of the Government Bond Traders Association (Himadsun) shows that SUN index climbed up since May 26 hitting from the 98.34 percent level to 102.06 percent yesterday.

On contrary, the yield of SUN with 10 years tenure as the target plunged sharply to the lowest level since June 2005. The yield of FR0031 SUN series maturing in November 2010 decliend by 79 basis points from 9.28 percent on May 26 into 8.49 percent yesterday.

The government discourse to have foreign capital flow restriction last year finally resulted in the investment restriction of SBI by stipulating obligatorily the investors here to hold the instrument for one month at minimum.

The policy will be implemented by July 7 to both foreign and local investors. However, the central bank statement prior to the deliberation of the policy has boosted up the incoming capital to bond market.

Head of Debt Capital Markets of PT NC Securities Heru Helbianto predicted the better SUN market condition will continue with the SBI investment restriction.

"Investment profile of SUN and SBI investors are different, but later there will be little diversification dealing with the restriction problem here to share investment portfolio of each investor," he said yesterday.

He said investors in SBI market has short term profile unlike the SUN investors profiles.

PT Penilai Harga Efek Indonesia (PHEI/IBPA) President Director Ignatius Girendroheru said the price rally has happened upon the worsening European market sparked by the Greece debt crisis.

The falling SUN yield benefits the company with the bond issuance scheme because SUN yield becomes the standard of coupon or corporate bond interest setting. The companies eyeing bonds include PT Selamat Sempurna Tbk, and PT Srana Multigriya Finansial.

Furthermore, BI will also issue 9 and 12 months tenure instruments to keep the capital inflow longer in Indonesia.

"One positive thing for the bond market of BI regulation is the investors that do not plan to buy SBI will play with bond due to the absence of instrument restriction," said analyst of PT Mandiri Sekuritas Handy Yunianto as quoted by Bloomberg yesterday.

Data compiled by HSBC Holdings Plc shows SUN has provided yield up to 10.5 percent this year or considered the best performance as form the other 10 Asian bond markets.

Data of the debt management directorate general per January to June 15 shows that foreign investor possession increased form DIR115.02 trillion into IDR149.32 trilion or 19 percent into 24 percent as form the total of tradable SUN worth IDR590.15 trillion into IDr614.03 trillion. (Bisnis/iaa/pul)