Concerns of market participants regarding the banking crisis in the United States (US) and the strict monetary policy in the US made foreign investors run away. The interest of foreign investors to buy government bond (SUN) plummeted at the auction yesterday.
The government held government bond s auction yesterday, Tuesday (3/28/2023), for seven series. Among these are the SPN03230628 (New Issuance) series, SPN12240328 (New Issuance), FR0095 (Reopening), FR0096 (Reopening), FR0098 (Reopening), FR0097 (Reopening) and FR0089 (Reopening).
The total bid received by the government reached Rp 29.34 trillion. The amount dropped 44.3% compared to the previous auction.
Of the total Rp. 29.34 trillion, the offer from foreign investors was recorded at Rp 6.05 trillion. This number is the lowest in the last six auctions since mid -January 2023.
From the total of these offers, the government only absorbs debt from foreign investors amounting to Rp 4.11 trillion.
The amount is the lowest in the last three auctions and not up to half of the offer at the last auction (Rp. 8.64 trillion).
Overall, the government absorbs debt worth Rp 20 trillion. That is, the government can meet indicative targets.
Of the total seven series offered, two series were not glimpsed by foreign investors namely the SPN03230628 (New Issuance) series and SPN12240328 (New Issuance). Each received an offer of Rp. 3.12 trillion and Rp. 2.54 trillion.
Director of SUN Directorate General of Financing and Risk Management (DJPPR) Deni Ridwan explained that the decline in foreign investor offers was caused by US monetary policy and the banking crisis in the US.
As is known, last week, the central bank of the US The Federal Reserve (The Fed) hoisted the benchmark interest rate of 25 basis points (BPS) to 4.75-5.0%.
Besides the Fed, the US is also being rocked by its three banks, namely Silicon Valley Bank (SVB), Silvergate Bank, and Signature Bank. The three banks collapsed making investors panic.
In addition to lower offers, bad news from Sun auction yesterday is the higher yield or yield in some series.
The weighted average yield won in the FR0096 benchmark series recorded 6.36%, lower than the previous auction’s 6.34%.
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