Ministry of Finance: Interest in SUN auctions soared thanks to expectations of the Fed's interest peak

This expectation was marked by the release of weak US economic data

Jakarta (Armfalcon.com) – The Ministry of Finance (Kemenkeu) recorded investor interest in the auction of government bonds (SUN), Tuesday (11/4), soaring thanks to investors’ expectations that the increase in the benchmark rate of the United States (US) Central Bank, The Fed will reach its peak. this year.

“This expectation is marked by the release of weakening US economic data,” said Director of Debt Securities at the Directorate General of Risk and Financing Management of the Ministry of Finance Deni Ridwan in an official statement in Jakarta, Tuesday.

The surge in investor interest was reflected in incoming offers or incoming bids IDR 44.99 trillion, an increase from IDR 29.34 trillion in the previous auction. From the incoming offer, the government decided to win a request of IDR 16.05 trillion.

According to Deni, the decision considers the yield or yield reasonable state securities (SBN) in the secondary market, planned financing needs for 2023, and the current condition of the state treasury.

In addition to Fed expectations, high investor interest in this auction was driven by quite positive domestic economic conditions with the release of data on foreign exchange reserves in March 2023 which increased to US$145.2 billion from US$140.3 billion in February 2023.

In terms of the type of investors, foreign investor interest has also increased as indicated by the increase in bids for SUN auctions to IDR 9.66 trillion from IDR 6.05 trillion in the previous auction.

The majority of incoming bids from foreign investors were in the 5- and 10-year tenor SUN series, namely IDR 8.44 trillion or 87.43 percent of the total incoming bids for foreign investors and won IDR 6.56 trillion or 28.88 percent of the total. awarded bids aka bids won.

Meanwhile, he revealed that the majority of investor requests were recorded for the 5- and 10-year tenor SUN series, namely IDR 26.68 trillion (59.3 percent of the total incoming bids) and IDR 11.45 trillion (71.3 percent of the total bids won). ).

The largest incoming bids and bids won were in the 10-year tenor, namely IDR 19.44 trillion (43.21 percent of the total incoming bids) and IDR 9.3 trillion (57.94 percent of the total bids won).

In line with the increasing demand for SUN in the primary market, the weighted average yield (Weighted Average Yield/WAY) in today’s SUN auction moved down by 2 basis points (bps) to 13 bps when compared to the WAY level in the previous auction. The biggest decline was in the 10-year tenor SUN series, which was 13 bps.

In accordance with the 2023 SBN issuance calendar, the next SUN issuance auction will be held on May 16, 2023.

Also read: The government issues “private placement” SUN worth IDR 1.7 trillion

Also read: The government issues “private placement” SUN for PPS of IDR 1.34 trillion

Also read: Ministry of Finance: Interest in SUN auctions is increasing amid SVB sentiment

source: www.antaranews.com

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