Indonesia’s Bonds Gain as Global Funds, Banks Boost Holdings

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Indonesia’s bonds gained for a second week as foreign investors and local banks bought the notes, pushing bids at a debt auction to a four-month high.

Global funds added 17.3 trillion rupiah ($1.3 billion) to their holdings in the four days through Thursday, set for the biggest weekly inflow in data going back to 2010, Finance Ministry data show. Domestic banks raised their holdings by 19.2 trillion rupiah in the same period. Together they helped boost demand at a June 23 debt auction to 40 trillion rupiah, the largest since a Feb. 3 sale.

“With credit growth slowing, some banks may be turning to bonds to park their funds,” said Dini Agmivia Anggraeni, a fixed-income analyst at PT Trimegah Securities. “Foreign investors returned as global sentiment surrounding the Fed improves.”

The yield on government debt due September 2026 fell 17 basis points this week to 8.32 percent, according to prices from Inter Dealer Market Association. That followed a 20-basis point drop in the prior period. The yield was steady on Friday.

The nation’s largest lenders PT Bank Central Asia, PT Bank Mandiri, PT Bank Rakyat Indonesia and PT Bank Negara Indonesia will likely scale back this year’s loan growth targets to 12 percent to 15 percent, from 15 percent to 17 percent previously, due to slowing economic growth, Bloomberg Intelligence analyst Diksha Gera wrote in a report.

The rupiah advanced 0.2 percent on Friday and for the week to 13,308 a dollar, prices from local banks show.

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