Foreign Investor Offers for Government Bonds Reached IDR 15.37 trillion

Foreign investors are competing to buy Government Bonds (SUN). As per the previous two weeks, the number of offers coming from foreign investors reached Rp 15.37 trillion. This amount is the highest since the auction on August 16, 2022, or the last five months.

Bidding from foreign investors at the SUN auction, Tuesday (31/1/2023), was recorded at IDR 10.91 trillion. This amount is much lower than the auction two weeks earlier.

It is known, at yesterday’s auction, the government offered seven series of SUN, namely series SPN0320503 (new issuance), SPN12240201 (new issuance), FRSDG001 (reopening), FR0096 (reopening), FR0098 (reopening), FR0097 (reopening) and FR0089 (reopening).

The total bids included in the SUN auction reached IDR 67.08 trillion. This amount is far higher than the previous auction which was only recorded at Rp 59.05 trillion.

Of the total foreign offerings, the government absorbed debt from foreign investors amounting to Rp 2.78 trillion.

Although the numbers rose sharply, the offers that came were only concentrated on two series, namely the five-year FR0095 and the 10-year tenor FR0096.

The total offers for the two series reached IDR 43.24 trillion or around 64% of the total offers.

Foreign bids received for FR0095 and FR0096 were recorded at IDR 6.71 trillion or 70% of the total.

However, even though it remains high, the interest of foreign investors to buy Government Bonds (SUN) slumped at yesterday’s auction.

This amount is only about a quarter of that absorbed at the auction two weeks ago, namely Rp. 10.74 trillion. This number is a record in itself because it is the highest since June 18 2019 or more than 3.5 years.

Furthermore, the high demand for government bonds at this auction is influenced by the still-high bank liquidity which is estimated to rise to Rp 185 trillion. In the previous auction, bank liquidity was only Rp 107 trillion.

This was conveyed by Henan Putihrai Asset Management Senior Vice President Head of Retail Product Research & Distribution Division Reza Fahmi.

According to him, there are also more series of bonds offered and cover all benchmark tenors, plus the Sustainable Development Goals (SDGs) series. Bonds with the highest number of requests are still the 10-year benchmark bond and 5-year benchmark bond.

This indicates that investors’ risk level is still medium, of course considering that the Fed and the FOMC will still raise interest rates in early February.