Economics
Indonesia’s Bond Metrics Suggest Outperformance Against India
- Indonesia has yet to take back all of its 2018 rate hikes
- India boosting the foreign cap limit may trigger more inflows
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Indonesia and India, often looped together because of a welter of economic similarities, face a potentially divergent outlook in 2020 thanks in part to contrasting scope for monetary and fiscal policy stimulus.
While India’s central bank has pulled its benchmark interest rate down to the lowest level since the aftermath of the global financial crisis, Indonesia’s has yet to fully reverse its monetary tightening of 2018. With a yield premium of about 50 basis points on 10-year local-currency notes, a slightly stronger investment-grade rating, and a more welcoming regulatory structure for foreign inflows, Indonesia has a number of advantages.