February SUN transaction predicted same or higher

BI/exchange

10/2/2011

Irvin Avriano A.

Bisnis Indonesia

February SUN transaction predicted same or higher

JAKARTA: The volume of of government bonds (surat utang negara/SUN) transactions which are traded throughout this month predicted will be same or predicted to be larger than IDR144.73 trillion that recorded for January.

The increase is also predicted that the transaction will be coloured by high volatility.

In January, the data of Indonesia Stock Exchange (IDX/PT Bursa Efek Indonesia/BEI) showed the volume of securities transactions increased by 56.69%, or become IDR144.73 trio compared to IDR92.36 trio in January last year.

"There will be the same or a little more crowded, which will also be added by high volatility," said PT BNI Securities bond analyst Ariawan told Bisnis recently.

He said the potential is also coupled with the potential correction in the price for middle length tenured SUN in the near future. SUN price correction will make the yield rate in the secondary market boosted.

However, he said, the potential correction would not have happened more in comparison to what happened in late January.

According to him, several factors are predicted to affect the SUN price correction are Bank Indonesia Rate (BI Rate) which is predicted to be added again in the middle of this year, high inflation that still happen, and negative sentiment from global investor.

Ariawan said the sentiment that happens to global investors in general nowadays is the yield on US government bond (US Treasury) that increasing, eg in the 10 years tenure from around 3.3% levels in January to a 3.7% level in the last few days.

The condition, he said, potentially increasing SUN premium yield demand. Demand on premium yield, he said, will cause global investors hoist yield on Indonesia government bond to a higher level and correcting its prices.

SUN trading frequency recorded by IDX in January also increased by 34.73%, to 8,030 times compared to 5,960 times in January 2010.

However, the trading volume of corporate bonds reached IDR4.66 trio or decreased by 28.32% compared to IDR6.51 trio in January last year. The trading frequency for corporate bonds also shrank 11.52% from 1,215 times in January 2010 to 1,075 times in January 2011.

Ramdhan Ario Maruto, PT Anugerah Securindo Indah Head of Fixed Income Division, judging the bond market liquidity is still good this month. He also thought the little transactions of corporate bonds compared to government transactions is still fair because of the less of its outstanding volume.

In other matters, the Ministry of Finance rumored has appointed three arranger for the foreign-denominated global bond issuance in this mid year. The three investment banks are JPMorgan, UBS AG, and Deutsche Bank AG.

"The number of target issuance is US$ 2 bio-3 bio," said one of the capital market participant.