High Investor Interest In SUN Auction Tuesday 31 October 2023

The Directorate General of Financing and Risk Management (DJPPR) of the Ministry of Finance held an auction of Government Securities (SUN) on Tuesday, October 31, the total bids included in this auction amounted to IDR 35.87 trillion.

This figure is higher than the results of the SUN auction two weeks earlier which reached Rp. 16.99 trillion.

Director of State Securities of the Directorate General of Financing and Risk Management of the Ministry of Finance, Deni Ridwan, said that in the midst of a wait and see attitude of investors waiting for the FOMC meeting this week, yesterday's SUN auction managed to attract investors with a significant increase from the previous SUN auction.

"The total incoming bids recorded an increase to Rp35.87 trillion from Rp16.99 trillion," he explained in his statement, Wednesday, November 1.

Deni added that the increase in economic liquidity and positive performance of the state budget until the end of September 2023 and the issuance of the new SUN series are factors that support today's SUN auction.

Meanwhile, the Fed's policy, which is believed to maintain interest rates at a high level for a longer period of time and the increasing geopolitical tension in the Middle East, is a factor that must be watched out for in the future.

Deni said that the issuance of the new SUN series FR0101 with a tenor of 6 years as a candidate for the 5-year benchmark tenor series for 2024 received a positive response.

"This is reflected in the bids that entered the series which reached Rp12.94 trillion or 36.1 percent of the total incoming bids, and won Rp10.45 trillion or 54.14 percent of the total awarded bids. Income and paid bids The series is the largest in today's auction," he said.

The number of offers from foreign investors at the SUN auction today increased to Rp4.86 trillion from Rp2.58 trillion at the previous SUN auction.

The majority of foreign investor offerings were in SUN with a tenor of 6 and 11 years amounting to Rp3.47 trillion or 71.4 percent of the total income bids for foreign investors, and won Rp2.78 trillion or 14.4 percent of the total awarded bids.

According to Deni, the majority of investor interest is still in SUN with a medium to long term, especially SUN with a tenor of 6 and 11 years.

The number of incoming offers for the two SUN series reached IDR 19.54 trillion or 54.48 percent of the total incoming bids, and was won IDR 14.55 trillion or 75.38 percent of the total awarded bids.

At yesterday's SUN auction, the Government again offered the FRSDG001 series which is the Bond Sustainable Development Goals (SDGs) series offered in the domestic market to complement the Bond SDGs published in the global market.

Deni said investors responded positively to the issuance of the series, as reflected in the incoming bids which reached Rp2.69 trillion or 7.49 percent of the total incoming bids and won Rp1.65 trillion or 8.55 percent of the total awarded bids.

On the other hand, Deni conveyed that financial market volatility in recent times has generally pushed for an increase in the level of returns that investors have asked for at this auction.

However, for the Government's Thematic Sustainable Development Goals (SDG) series FRSDG001, it can issue lower bonds of about 10 bps from the previous secondary market.

"Considering the reasonable SBN yield in the secondary market, plans for financing needs in 2023, and the current state budget conditions, the Government decided to win an offer of IDR 19.3 trillion at today's SUN auction. In accordance with the calendar for issuing Government Securities (SBN) in 2023, the next SUN issuance auction will be held on November 14, 2023," he concluded.