Indonesia’s bonds gained for a sixth day, the longest winning streak since October, on speculation local debt sales by the government will slow after it raised a record amount from a global offering.
The yield on the 8.375 percent sovereign notes due March 2024 dropped 11 basis points, or 0.11 percentage point, to 8.47 percent as of 4:19 p.m. in Jakarta, according to prices from the Inter Dealer Market Association. That’s the lowest level since Jan. 1. The rate has declined 58 basis points in six days.
Indonesia raised $4 billion from a sale of dollar bonds last week, matching South Korea in Asia’s largest international issuance. Overseas investors added 2.08 trillion rupiah ($172 million) to their holdings of local-currency debt this month through Jan. 13, official data show. Bank Indonesia sees a risk that core inflation may quicken and will seek to keep it below 5 percent this year, compared with 4.98 percent in December, Governor Agus Martowardojo said yesterday.
“The global offer would reduce potential supply, which gives foreign investors more confidence to buy local bonds,” said Handy Yunianto, head of fixed-income research at PT Mandiri Sekuritas in Jakarta. “The yield doesn’t have much lower to go unless inflation slows further and the currency stabilizes.”
The rupiah will rally 6.8 percent this year to 11,400 per dollar, recouping a third of last year’s 21 percent plunge, according to its most-accurate forecaster Lloyds Banking Group Plc. The local currency declined 0.3 percent today to 12,118, prices from local banks show.
One-month non-deliverable forwards fell 0.5 percent to 12,013, a 0.9 percent premium to the onshore spot rate, according to data compiled by Bloomberg.
Bank Indonesia won’t redenominate the currency this year as the economy isn’t in a conducive condition, Deputy Governor Ronald Waas said in Jakarta today, adding that the process is still ongoing.
The rupiah’s one-month implied volatility, a measure of expected moves in the exchange rate used to price options, surged 49 basis points to 13.68 percent. A fixing used to settle the forwards was set at 11,867 per dollar today by the Association of Banks in Singapore, unchanged from yesterday.