Ministry Of Finance: Investor Interests Pretty Positive At SUN Auctions In The Midst Of Wait And See The Results Of The Fed Meeting

Illustration. (Photo: Doc. Antara)

JAKARTA - The Ministry of Finance (Kemenkeu) reported that investor interest was quite positive in the auction of state debt securities (SUN) on Tuesday, January 31, amid a wait and see attitude regarding the results of the meeting of the Central Bank of the United States (US), The Fed today.

In an official statement received by Antara, in Jakarta on Wednesday, February 1, the Director of State Debt Letter of the Directorate General of Financing and Risk Management of the Ministry of Finance, Deni Ridwan, expressed investor interest as reflected in the increase in incoming bids to IDR 67.08 trillion from the previous auction of IDR 59.05 trillion.

This is driven by the decline in global inflationary pressures and the potential recession in the US which is unlikely to be as bad as previously thought and supported by a relatively better projected emerging market economic condition (emerging market) than developed countries (advanced countries) in 2023.

In addition, capital flows in the bond market have re-entered developing market countries, including Indonesia throughout January.

Taking into account the yields of reasonable state securities (SBN) in the secondary market and plans for financing needs in 2023, the government decided to win a request of IDR 23 trillion from the total incoming bids.

At yesterday's auction, the government again offered the FRSDG001 series which investors also responded positively, as reflected in the high demand for entry which reached IDR 6.17 trillion or 9.2 percent of the total incoming bid and was the highest entry offer since the FRSDG001 series was offered through the first auction.

The FRSDG001 series is a Bond sustainable Development Goals (SDGs) bond series offered in the domestic market to complement Bond SDGs published in the global market. This series is published with an 8-year tenor (date October 15, 2030) with a coupon of 7.375 percent and can be used to meet the banking sector's Macroprudential Inclusive Financing Ratio (Rasio).

Deni continued, investor demand was still dominant in the 5th and 10th series of SUN tenors, with the number of incoming bids and bids won (warded bids) each of 64.45 percent of the total incoming bids and 54.13 percent of the total winning bids.

The biggest incoming offer was at a 5-year tenor, which was IDR 21.89 trillion or 32.63 percent of the total incoming bid and won IDR 8.15 trillion or 35.43% of the total bid won.

The capital for entering foreign investors at the SUN auction continues, marked by an incoming offer of IDR 10.91 trillion. This amount is the majority in the 5 and 10 year SUN tenor series, namely IDR 7.61 trillion or 69.75 percent of the total foreign investor entry offer and won IDR 1.29 trillion or 5.61 percent of the total bid won.

The majority of the weighted average yield (Weighted Average Yield/WAY) in today's SUN auction fell by 4 basis points (bps) to 13 bps compared to WAY's previous auction, except for a tenor of 15 years and 20 years, an increase of 3 bps and 2 bps, respectively. The largest decline in WAY was in SUN's 5 year tenor, namely 13 bps.

The government always considers the latest financial market conditions, financing needs, and state cash conditions, so that the issuance of SBN is carried out as needed, with the most optimal costs and measurable risks. In accordance with the SBN issuance calendar in 2023, the next SUN issuance auction will be held on February 14, 2023.