Indonesia 10-Year Debt Set for First Monthly Gain Since December

Indonesia’s 10-year government bonds advanced in April, snapping three months of declines, as monetary easing in developed nations spurred inflows into the nation’s debt. The rupiah declined for a second month.

Overseas investors pumped a net 14 trillion rupiah ($1.4 billion) into local-currency sovereign notes this month through April 26, taking holdings to a record 294.7 trillion rupiah, finance ministry data show. Foreign-currency reserves may rise from a two-year low of $104.8 billion in March after the government sold $3 billion of dollar bonds on April 8, with investors submitting bids for more than four times the amount offered, official data show.

The yield on the government’s 5.625 percent notes due May 2023 dropped nine basis points in April to 5.48 percent as of 9:20 a.m. in Jakarta, prices from the Inter Dealer Market Association show. The yield was little changed today. That compares with the 3.47 percent rate on similar-maturity Philippine notes and 3.41 percent on Thai securities.

“The bonds turned around after the successful global issuance, which improved confidence in investing in Indonesia as it increases the reserves and the rupiah’s stability,” said Dini Anggraeni, a fixed-income analyst at PT Mandiri Sekuritas in Jakarta. “The rally may continue as yields remain attractive.”

Bank of Japan Governor Haruhiko Kuroda announced on April 4 a plan to buy 7.5 trillion yen ($77 billion) of debt a month, almost as much as the Federal Reserve’s $85 billion of purchases.

Rupiah Weakens

The rupiah fell 0.1 percent this month and was little changed today at 9,723 per dollar, prices from local banks compiled by Bloomberg show. It traded at a 0.1 percent premium to its one-month non-deliverable forwards, which advanced 0.4 percent in April and were steady today at 9,735, data compiled by Bloomberg show.

A daily fixing used to settle the derivatives was set at 9,720 yesterday by the Association of Banks in Singapore, compared with 9,719 on March 28. Today’s rate will be published 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, dropped 19 basis points, or 0.19 percentage point, in April to 5.55 percent. It fell 18 basis points today.

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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