Indonesia's Economic Conditions Are Improved, Foreign Investor Interest Follows Auction On Government Securities Is Increasing

JAKARTA - Director of State Securities (SUN) of the Directorate General of Financing and Risk Management of the Ministry of Finance Deni Ridwan said the interest in the SUN auction increased because investors were optimistic about domestic conditions.

investor interest in the auction of SUN on November 8, 2022 increased to IDR 22.99 trillion, from IDR 17.09 trillion in the previous auction because investors were optimistic about domestic conditions.

"Optimism is shown with Indonesia's economic growth rate in the third quarter of 2022 at 5.72 percent year on year (yoy), higher than the second quarter of 2022 at 5.45 percent (yoy) and inflation in October at 5.71 percent (yoy), down from 5.95 percent (yoy) in September," Deni said in an official statement received quoted by Antara, Thursday, November 10.

Nevertheless, he said investors were still careful when global market conditions were still volatile after the meeting of the Central Bank of the United States (US), the Fed in November signaled that the Fed's policy was still quite hawkish. In addition, investors are still waiting for the release of US inflation data this week.

From interest in yesterday's SUN auction, the government decided to win a request of IDR 10 trillion taking into account the outlook for the decline in the need for state budget financing in 2022 through the issuance of state securities (SBN) and the dynamics of the latest financial market conditions.

Participation of foreign investors seems to have increased to IDR 3.17 trillion from IDR 2.26 trillion in the previous auction. The total number of incoming bids from foreign investors was in the 6th and 11th series of SUN tenors, which was IDR 1.95 trillion or 92.95 percent of the total incoming bids of foreign investors and won IDR 1.52 trillion or 15.22 percent of the total offered won (warded bids).

The 6 and 11-year-old SUN series dominate investor demand at this auction, with 75.71 percent of the total incoming bids and 65 percent of the total awarded bids, respectively.

In addition, Deni said that the largest incoming bids was still at the 11-year tenor, namely Rp9.97 trillion or 43.44 percent of the total incoming bids and won Rp950 billion or 9.5 percent of the total awarded bids.

The weighted average yield won (weighted average yield/WAY) at yesterday's auction rose by 4 basis points (bps) to 12 bps compared to WAY in the previous auction. The largest strengthening was in 6 year's SUN tenor of 12 bps.

Based on the calendar for the issuance of SBN 2022, the auction for the issuance of SUN will then be held on November 22, 2022.