JAKARTA. The interest rate increase by The Fed and US bond’s yield increase have put the government securities (lit. Surat Berharga Negara/SBN or Surat Utang Negara/SUN) market under the pressure, causing the incoming bids in yesterday’s auction (10/5) to arrive at only IDR 19.74 trillion.
The data of the Directorate-General of Budget Financing and Risk Management (DJPPR) revealed that out of the said amount, the government only managed to realise IDR 7.76 trillion in the SUN auction. It is clearly below the initial target of IDR 20 trillion.
Fayadri, Head of Fixed Income of Bank Negara Indonesia (BNI), claimed that the recent SUN auction ended with the lowest incoming bids in all auctions held in 2022. According to Fayadri, this is a result of a wait-and-see attitude that was displayed by investors following The Fed’s decision to up the interest rate and rumour of possible future increases. “It then prompts the risk aversion tendency of investors, which is reflected in Indonesia’s CDS that continues to record its highest level this year,” Fayadri explained, as quoted from Kontan, yesterday (10/5).
Fayadri specified that the five-year CDS level is currently at 131.95, and the ten-year CDS is at 203.74. This risk perception score significantly increased from the number reported in the beginning of the year, in which five-year CDS was at 74.69 and ten-year CDS was at 136.46. (AM/ZH)