Indonesian Debt Sales Draw Most Bids Since 2016 as Risks Recede
Indonesian Debt Sales Draw Most Bids Since 2016 as Risks Recede
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A sale of Indonesian sovereign debt drew the most bids in more than three years, underscoring rising demand for emerging-market assets as trade tensions eased.
The Ministry of Finance received 94.98 trillion rupiah ($7 billion) of offers at an auction of 15 trillion rupiah of government bonds. The level of incoming bids was a record based on data compiled by Bloomberg going back to September, 2016.
The auction, taking place just one week after the U.S.-China phase-one trade deal, suggests that investors are returning to developing-nation assets as global growth risks recede. The benchmark 10-year Indonesian bond yield dropped to its lowest since April 2018.
“Foreign and local investors entered the auction today due to offshore easing in global geopolitics, local seasonality and an attractive return to the risk provided by the bonds,” said Branko Windoe, treasury head at PT Bank Central Asia.
The government ended up selling 20 trillion rupiah of debt. Indonesian auctions are a widely-watched barometer of global risk appetite as overseas investors own almost 40% of the nation’s sovereign bonds.
The 10-year bond yield dropped five basis points to 6.76% on Tuesday, taking the decline for the year to about 30 basis points.
The successful sale also suggests that fears over an outbreak of the coronavirus in China hasn’t yet dented appetite for some Asian risk assets.
“Indonesian economic fundamentals are improving,” said Dian Ayu Yustina, economist and bond analyst at PT Bank Danamon. “Inflation is at its lowest point and the trade balance has narrowed.”
Investors may also have bought the bonds in anticipation of more easing by the nation’s central bank, which could cut rates by 25 basis points in the first quarter, Yustina said.
--With assistance from Masaki Kondo.
To contact the reporters on this story: Chester Yung in Singapore at kyung33@bloomberg.net;Tassia Sipahutar in Jakarta at ssipahutar@bloomberg.net
To contact the editors responsible for this story: Tan Hwee Ann at hatan@bloomberg.net, Nicholas Reynolds
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