Bond Market Indonesia: Weak Demand for ORI014 Retail Bonds
The latest series of (conventional) Indonesian Retail Bonds (in Indonesian: Obligasi Ritel Indonesia, or ORI) was poorly absorbed by Indonesian retail investors. According to the latest available data, only IDR 8.95 trillion (approx. USD $663 million) was invested in the ORI014 series that was on sale between 29 September and 19 October 2017.
These proceeds are well below the indicative target of IDR 20 trillion (approx. USD $1.5 billion) that was set by the government. The low coupon rate - 5.85 percent - is primarily blamed for the poor performance of ORI014 bonds, especially considering tax still needs to be paid. The 5.85 percent coupon for the three-year bonds was the lowest in the history of ORI bonds (since 2006 the Indonesian government has been issuing ORI bonds once per year on average).
Even the three-year government bonds (locally known as SUN) carry a more attractive rate at 6.1 percent. Also the guaranteed interest rate of the Indonesia Deposit Insurance Corporation (IDIC) on rupiah deposits made by commercial banks and rural banks is higher at 6.00 percent.
Generally, interest rates have been declining in Indonesia due to the central bank's push for a lower interest rate environment over the past 1.5 years, slashing its key rate from 7.00 percent to 4.25 percent in a bid to boost credit growth and economic expansion.
Indonesian ORI Bond Series:
Silakan login atau berlangganan untuk mengomentari kolom ini