Rupiah Forwards Rise to This Month’s High After Global Bond Sale

Indonesia’s rupiah forwards reached the strongest level this month after a sovereign global bond sale drew bids for more than four times the amount of debt sold. Local-currency government bonds fell.

The country raised $3 billion yesterday by tapping the international market for the first time in 2013, with investors submitting $12.5 billion of bids, according to a statement on the debt management office’s website. Some $1.5 billion of 10- year notes were sold at 3.50 percent, the lowest-ever rate for non-Islamic securities denominated in dollars.

“The rupiah is supported by the global bond sale, which was heavily oversubscribed and achieved a good rate,” said Nurul Eti Nurbaeti, Jakarta-based head of treasury research at PT Bank Negara Indonesia. “The sale revived investors’ confidence in investing in the country.”

One-month non-deliverable forwards strengthened 0.2 percent to 9,761 as of 9:07 a.m. in Jakarta, data compiled by Bloomberg show. The contracts reached 9,759 earlier, the strongest level since March 28. They traded at a 0.2 percent discount to the spot rate, which advanced 0.1 percent to 9,743 per dollar, prices from local banks compiled by Bloomberg show.

A daily fixing used to settle the derivatives was set at 9,756 yesterday by the Association of Banks in Singapore, the same level as on April 5. Today’s rate will be released at 11:30 a.m. in the city-state. One-month implied volatility for the rupiah, a measure of expected moves in the exchange rate used to price options, rose 11 basis points to 5.94 percent.

The yield on the 5.625 percent rupiah bonds due May 2023 climbed one basis point, or 0.01 percentage point, to 5.68 percent, the highest level since Oct. 31, according to prices from the Inter Dealer Market Association. The yield on the 3.75 percent dollar notes due April 2022 dropped one basis point to a one-month low of 3.35 percent, data compiled by Bloomberg show.

To contact the reporter on this story: Yudith Ho in Jakarta at yho35@bloomberg.net

To contact the editor responsible for this story: James Regan at jregan19@bloomberg.net

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