Indonesia’s foreign debt growth in Q4 / 2017 was relatively under control


Indonesia’s foreign debt growth in Q4 / 2017 was relatively under control. Indonesia’s ULN at the fourth quarter end of 2017 was 352.2 billion US dollars or grew 10.1% (yoy). These EDs development takes place both in the public and private sectors, in line with the need for financing for infrastructure development and other productive activities. By the time period, the structure of Indonesian ULN at the end of Q4 / 2017 is fairly safe. The ED is still dominated by long-term external debt, which has an 86.1% share of total external debt and at the end of fourth quarter 2017 it grew 8.5% (yoy). Meanwhile, short-term borrowings of external debt grew 20.7% (yoy). According to the economic sector, the private external debt position at the end of fourth quarter 2017 is mainly owned by the financial sector, processing industry, electricity, gas and clean water (LGA), and mining. The EDs share of these four sectors to total private external debt reached 76.9%, slightly lower than 77.0% in the previous quarter. ED growth in the financial sector, manufacturing sector and LGA sector increased compared to Q3 / 2017. On the other hand, mining sector debt experienced a contraction in growth. Bank Indonesia views the development of external debt in Q4 / 2017 is still under control. Indonesia’s Gross Domestic Product (GDP) ratio at the end of Q4 / 2017 was stable at 34%. In addition, the short-term debt ratio to total external debt is also relatively stable at 13%. Both ED ratios are still better than some peers. Bank Indonesia will continue to monitor the ULN progress from time to time to ensure ED can play an optimal role in supporting development financing without incurring risks may affect macroeconomic stability.

Indonesia Composite Bond Index (ICBI) earlier this week closed at 244.4226 or down -0.2036 point from Friday’s close. The ICBI decline was triggered by the government bond return index performance, INDOBeXG-Total Return, which fell -0.2415 points to 241.4230 level. Meanwhile INDOBeXC-Total Return (index of corporate bond return) rose + 0.0676 point to 255,9407 level. The IBPA-IGSYC curve (IBPA-Indonesia Government Securities Yield Curve) is dominated by bearish on almost all of its tenor (2-30years). The average yield of 10-30 year tenor + 2.27 bps increase with the middle group (5-7years) the biggest pressure is + 2.96bps. For short tenors (<5years) and long (> 7years) each rose by + 0.83bps and + 2.43bps. INDOBeXG-Effective Yield at yesterday’s close continued up + 0.0259 point to 6.4615 level. The price correction colored all four benchmark SUN series lasted until closing with an average down larger than the afternoon session -36.33bps vs -27.86bps. The biggest price correction experienced FR0065 series of -67.85bps. The majority of the price of SBN type FR and ORI also dominated the weakening with an average down -17.82 bps. So INDOBeXG-Clean Price on Monday’s trading closed down to the level of 118.9737 (-0.2199 points). Bond transactions in the secondary market yesterday took place less lively. Total frequency down -21.79% from 780 times to 610 times, and total volume down -28.68% from Rp14.22n to Rp10.15tn. The minimum transaction is more felt in long tenor SUN series with total frequency down as much as 159 times and total volume down by Rp4.81tn. The yesterday’s largest total volume recorded series FR0074 ie Rp1, 82tn. While the transactive series transacted registered by FR0075 that as much as 99 times. For corporate bonds, the largest total volume was recorded at Rp100 billion by BBRI02BCN2, while the most active transactions were recorded 4 times by IMFI03CCN2 and MDLN01ACN1. The first trading day after the Lunar New Year holiday, the domestic bond market is still stuck in the red zone. In the quiet midst of the transaction, the majority correction of SBN prices was triggered by domestic factors, namely the depreciation of the rupiah which at the close yesterday weakened -36.0 points to Rp13.560 / US $ (Bloomberg) level, and Indonesia’s trade balance performance in January which deficit US $ 0, 68 billion. However, the foreign re-entry to the SBN market, reflected in the net buy at the weekend (15/2) of Rp4.06tn can be a positive catalyst for the movement of bond prices today. Today, the government will again hold an SBSN auction with an indicative Rp8.0tn target. There are 6 reopening series auctioned which 1 series consist of SPN-S and 5 PBS series. In Tuesday’s trading, lonely transactions predicted would still overshadow the secondary bond market. In addition to the continued dominant sentiment absence from global, the auction existence also helped trigger such transactions lack. And amidst lonely transactions, SBN price movements are still potentially weakening.
The rupiah exchange rate against the US dollar opened lower in trading today. Rupiah starts approaching Rp13.600 per USD. Launched Bloomberg Dollar Index, the rupiah at spot exchange rate trading in the Asian market fell 11 points or 0.08% to Rp13.571 per USD. Today, the Rupiah moves in the Rp13,559-Rp13,575 range per USD. Citing research by MNC Securities, the rupiah weakening against the US dollar is still continuing. This is a sales accumulation by foreign investors pushing up the yield of Government Securities in trading on Monday, February 19, 2018. While Yahoo finance recorded, the Rupiah weakened 16 or 0.12% to Rp13.572 per USD. In Yahoo finance monitoring, Rupiah is in the Rp13,556 range per USD to Rp13,572 per USD.


Risk aversion sentiment seems to be dominating today’s market movement with many catalysts such as from political uncertainty in the US after reports that Special Advisor Robert Mueller commissioned 13 Russian and three Russian companies over the weekend to intervene in US presidential elections in 2016, geopolitical tensions between Israel and Iran uncertainty over Brexit talks starting on Tuesday. Today’s data focus will be on RBA minutes report at 7:30 am, German economic sentiment from ZEW at 17:00 pm and a meeting of EU Finance Ministers.

Potential Movement
Gold prices have a chance to move higher amid financial market jitters over political conditions in the US, geopolitical tensions in the Middle East and investors looking for hedging assets behind high inflation projections with visible resistance targets in the $ 1350- $ 1355 area.
Heating up conditions in the Middle East, especially between Israel and Iran that could disrupt production could push oil prices up in the short term with a resistant target seen at $ 63.00.
The new ECB representative election potentially sustains EURUSD’s rise in the short term as it is seen to pave the way for a more hawkish Jens Weidman (President of Bundesbank) to replace Draghi in the next period with a resistance target seen at 1.2460. The important data today is the German economic sentiment report from ZEW.
Again the investor’s anxiety about the negotiation Brexit risks potentially weaken GBPUSD in the short term after the recent pessimistic British economic data release by testing the nearest support level at 1.3960 – 1.3950.
The statements presence from Japanese officials that they began to monitor the yen’s strength with anxiety and ready for intervention when needed could trigger a USDJPY rise in the short term by testing resistance levels at 107.00 – 107.50.
The dovish RBA release minutes as well as the pessimistic comments from RBA Michele Bulloek that worry about spending and household saving rates could potentially burden the movement of AUDUSD today to test the support level at 0.7860 – 0.7850.

The following Indonesia Economic Indicators we update on Tuesday 20/02/2018 at 11:13 am:

Source: bloomberg / afp / xhua / bi / ojk / kemenkeu / bps / reuters / antara / ibpa / kontan / bisnis / wartaekonomi / investordaily / bbc / kompas / liputan6

Treasury and International Division – PT Central Java Regoinal Development Bank
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