Indonesia Market Appetite Skewed Toward SOEs Bonds

The demand for stated owned bonds continue to rise amid the Otoritas Jasa Keuangan (OJK) plan to include  50% of those bonds into minimum investment of government securities for non-bank financial institution, as stated by OJK draft circulated last week. The increasing appetite for SOE bonds could be seen from the bids received for those bonds in the primary market as well as coupon rate offered which tends to be set at the low end of its indicative coupon rates. The latest SOE bonds are the bonds offered by PP Property, Tbk (PPRO IJ, A-/Stable) those reportedly oversubscribed by almost 4 times. The bids received amounted to IDR2.3trn versus targeted issuance size of IDR600bn. As such, the coupon rate being offered were set at close to lower end of indicative price set during the book building period; 3 years priced at 9.15% (from 9.0% -9.25% guidance) and 5 years at 9.9% (from 9.75% -10.25% guidance).

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