Home Investor Corner Indonesia has Potential to Issues Bonds US$7B in 2Q 2019

Indonesia has Potential to Issues Bonds US$7B in 2Q 2019

Indonesia's Ministry of Finance (MoF) officially opens the Retail Government Bonds (ORI15) with indicative coupon rate 8.25 percent with tenor of three years - Photo by MoF

JAKARTA (TheInsiderStrories) – Indonesian government and state-owned enterprises (SOEs) has potential to issue bonds around Rp100 trillion (US$6.99 billion) in the second quarter (2Q) of 2019. Most of the amount will in government bond while six SOEs has reported to Indonesia Stock Exchange (IDX) to release bond around Rp13 trillion.

The six issuer’s bond issuance details are as follows: PT PP Tbk (IDX: PTPP) Rp1.5 trillion, PT Semen Indonesia Tbk (IDX: SMGR) Rp.4.9 trillion, PT Waskita Karya Tbk (IDX: WSKT) Rp1.84 trillion, PT Adhi Karya Tbk (IDX: ADHI) Rp.2 trillion, PT Waskita Beton Precast Tbk (IDX: WSPB) Rp500 billion, and PT Kimia FarmaTbk (IDX: KAEF) Rp1.5 trillion.

The government estimated will issue a total gross government bond of 50-60 percent throughout the first semester of 2019, which includes retail government bond, foreign exchange government bond and regular government bond instruments. The total issuance value is around Rp128 trillion.

Historically, the number of government bonds will tend to be stable because after the fasting period and Eid Al-Fitr in May-June, where the number of requests will return high.

Finance ministry recorded the realization of the net government bonds issuance in the first quarter of 2019 reached Rp185 trillion and SUKUK issuance reached Rp81.44 trillion. Totally, the bonds issuance value reached Rp266.44 trillion.

The Directorate of State Debt Management at the Directorate General of Financing and Risk Management of the Ministry of Finance stated that the total gross bonds reached Rp330.1 trillion in 1Q 2019. This value reached 39.98 percent of the bonds issuance target throughout 2019 worth Rp825.7 trillion.

Meanwhile, the total bonds and SUKUK issuance throughout 2019 (January-May) totaling 30 emissions from 21 companies going public worth Rp30.84 trillion (US$2.17 billion).

In addition, the auction of Sharia Bonds is still stable, which until April, the number of incoming bids amounted to Rp18.52 trillion, an increase from the previous amount of Rp18.41 trillion.

This auction actually made the government’s absorption decrease from Rp8.03 trillion to Rp6.06 trillion. Uncertainty due to the election makes the government have to limit absorption to keep yields from rising.

Currently, the total bonds and SUKUK issues listed on the Indonesia Stock Exchange amounted to 401 emissions with an outstanding nominal value of Rp424.92 trillion and Rp674.5 billion, issued by 117 listed companies.

So far, the bonds issuance by the new State-Owned Enterprises amounted to Rp12.5 trillion in 1Q 2019. The number also declined quite sharply compared to the same period last year reaching Rp59.8 trillion.

The issuance nominal also decreased compared to 4Q 2018, which until April there were only 4 series of government bond’s issued through the mechanism of a private placement with a cumulative value of Rp5.64 trillion. In 4Q 2018, the government recorded 8 series of government bond with a total value of Rp12 trillion.

However, this achievement is still in line with the projection set in 2019 State Budget, which so far is still on track because foreign and domestic interests are still quite favorable looking at Indonesian instruments, said a senior official at the end of last month.

At present, government bond listed in IDX are 100 series with a nominal value of Rp2,504.01 trillion and $ 400 million, while Asset Backed Securities are 10 emissions worth Rp9.32 trillion.

Meanwhile, government bond maturing throughout the 1Q of 2019 was recorded at Rp148.1 trillion. This value reached 38 percent of the total maturing debt throughout 2019 worth Rp382.4 trillion.

IDX since the beginning of May also noted that there was an increase in the average trade, where the highest occurred at the average IDX daily transaction value which had increased above 100 percent, from Rp9.12 trillion to Rp22.79 trillion, an increase of 149.89 percent in the two-week transaction beginning in May.

Returning to the excitement, the projected growth in bond issuance was also triggered by the companies’ need for expansion and refinancing. From year to year the outstanding number of corporate bonds continues to grow.

PT Pemeringkat Efek Indonesia (Pefindo) reported, the outstanding corporate bonds reached Rp437.6 trillion or grew 3.1 percent from Rp424.4 trillion last year in 1Q 2019. Meanwhile, the number of outstanding medium-term note (MTN) grew 0.3 percent on an annual basis to Rp65.1 trillion.

In other words, on annual basis the number of new corporate bond issuance reached Rp22.5 trillion, and the number of new MTN issuance reached Rp3.1 trillion.

It is projected that the number of issuance of corporate bonds this year can equal or exceed the number of issuances in the last year which reached Rp105.3 trillion for bonds and Rp23.5 trillion for MTN.

US$1 = Rp14,300

Written by Daniel Deha, Email: daniel@theinsiderstories.com

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