Presentation on theme: "Do not refresh this file Government Securities Prospects in 2013 Directorate of Gov Debt Securities, DG of Debt Management Ministry of Finance Republic."— Presentation transcript:
Do not refresh this file Government Securities Prospects in 2013 Directorate of Gov Debt Securities, DG of Debt Management Ministry of Finance Republic of Indonesia Ministry of Finance of the Republic of Indonesia
Do not refresh this file Outline 1.Government Securities Management and Financing Strategy 2.Government Securities Performance 3.Government Securities Market Prospects in 2013 2
Do not refresh this file Government Securities Management and Financing Strategy 3
Do not refresh this file Strategi Umum Pengelolaan SUN 2013 Strategic Management of Government Securities 2013 Increasing domestic retail investors Developing ORI distribution channels Buyback Debt Switch Sufficient amount of Government Securities Regularity of issuance schedule Instrument diversification Investor diversification Investor Relation Unit Low cost and risk control Domestic Government Securities Issuance Implementing Asset Liability Management Budget Financing Market Development Inclusive Financial Portofolio Management 4
Do not refresh this file Supply Government Debt Securities SUKUK Demand Banks Foreigners Insurance Company Mutual Fund Central Bank Pension Funds Securities Company Retail Investor Government Securities Market Development Framework Deep & Liquid Market Sufficient Market Absorption & Efficient Price/Yield Primary Market Activities: Regular Issuance (Book building, Issuance, Private Placement) Infrastructure: a. Auction System (in development process with IDX): -Electronic Trading Platform (ETP) for Retail Govt. securities - Hittable of PDs quotation -Debt Switch Program (Many to Many) b. Institutional infrastructure Secondary Market Activities: Buyback, Debt switch, Securities Lending Infrastructure: Buyback System, Primary Dealers, Selling Agent, Repo, Benchmark Yield Curve, Brokers/Dealers, Price Discovery Mechanism 5 MARKET INFRASTRUCTURE Regulation and Supervision
Do not refresh this file Financing Trend, 2004 – 2013 (trillion IDR) Notes: * LKPP Unaudited 2012 ** Revised Budget 2013 6
Do not refresh this file Gov’t Securities Issuance Plan 2013 7 Gov’t Securities Operation – Policy Combination Domestic market issuance will be prioritized Issuance in benchmark tenor, Benchmark Series for 2013: Issuance in global market Maximum non-IDR govt securities issuance approximately 18%- 20% from total gov’t debt securities issuance Buyback, debt switching, direct transaction Initiatives strategic :USD securities issuance in domestic market & sukuk project financing FR 66 – 5 Y FR 63 – 10 Y FR 64 – 15 Y FR 65 – 20 Y Primary Dealers 1.Citibank N.A 2.Deutsche Bank AG 3.HSBC 4.PT. Bank Central Asia, Tbk 5.PT. Bank Danamon Indonesia, Tbk. 6.PT. Bank Internasional Indonesia, Tbk 7.PT. Bank Mandiri (Persero), Tbk 8.PT. Bank Negara Indonesia (Persero), Tbk 9.PT. Bank OCBC NISP, Tbk 10.PT. Bank Panin, Tbk 11.PT. Bank Rakyat Indonesia, Tbk 12.PT. Bank Permata, Tbk 13.PT. Bank CIMB Niaga, Tbk 14.Standard Chartered Bank 15.JPMorgan Chase Bank NA. 16.PT. Bahana Securities 17.PT. Danareksa Sekuritas 18.PT. Mandiri Sekuritas 19.PT. Trimegah Securities, Tbk
Do not refresh this file Financing Progress 2013 8 *Adjusted by changes in Cash Management & Debt Switch
Do not refresh this file Government Securities Performance
Do not refresh this file Primary Market Performance 10 In the last auction, foreign participation reached the highest level of success rate (34%), meanwhile the average foreign participation in Government Debt Sec Auction is 56%. Increasing volatility in second quarter 2013 influenced demand in domestic market
Do not refresh this file Average daily trading (IDR Trilion) Secondary Market Performance 11 Up to Sept 4, 2013 Global Financial Crisis Eurozone sovereign debt crisis [In Percentage] As of Sept 10, 2013 Activity in the domestic bond market increasing Yield of Benchmark Series trend to pick up Bid Ask Spread 10 Y Govt Bond Turn Over 10 Y Govt Bond
Do not refresh this file LCY 10 Year Government Bonds Latest YieldYTD Change (BP) MTD Change (BP) HK2.457+185.9+12.2 ID8.818+362.7 +40.3 JP0.747-4.4+2.7 KR3.620+46.0+9.0 MY3.900+39.7-15.6 PH3.440- 71.10-0.3 SG2.690+139.0+2.0 TH4.361+85.1+9.3 US2.964+120.7+18.0 VN9.150- 105.0+10.0 Yield SBN pada peer’s market As of September 11, 2013 Source Asian Bonds Online 12 Indonesia Gov’t bond yield post take highest increase among others in Asia region.
Do not refresh this file 13 Ownership of Tradable Domestic Government Securities In IDR Trillion During 2009 – 2013, domestic financial institutions are picking up in size, however growth of ownership from this institution still lower than foreign investors.
Do not refresh this file Foreign Investor Activity Net Buyer (Seller) - Non ResidentForeign Ownership - Proportion by Tenor [In IDR Trillion] 14 Foreign investors mostly dominated by real money long term investors Capital outflow month to date is amounted IDR 18.59 Trillion lower than capital outflow in Sept 2011 (European Crisis) amounted IDR29.29 Trillion
Do not refresh this file 10 Y Gov Bonds Yield and Foreign Ownership Movement During Crisis Catatan : * During September to December 2008 ** During August to September 2011 *** During 1 February s.d. 1 June 2012 In September 2011, foreign investors pulled out from domestic government bond market in bigger volume than in September 2008. However, the impact on the benchmark domestic government yield was much less pronounced. 15 5 Sept 2008: Foreign Ownership IDR108.4trn (20.0%) Subprime Mortgage Crisis 10 Maret 2009: Foreign Ownership IDR78.7trn (14.5%) 13 Sept 2011: Foreign Ownership IDR249.2trn (35.9%) 29 Sept 2011: Foreign Ownership IDR229.1trn (32.9%) European sovereign debt concerns 13 Feb 2012: Foreign Ownership IDR236.4 trn (31.80%) As of Sept 10, 2013
Do not refresh this file The Government Proactive Effort 16 MoF & Central Banks is coordinating on market stabilization Government Debt Buy Back on June 10 th IDR 0,496 Tr Government Debt Buy Back on June 13th IDR 0,499 Tr Government Debt Buy Back on June 20 th IDR 0,5Tr Government Debt Purchase by Central Banks on June 12 th 2013 IDR 1.2 Tr As of Sept 10, 2013
Do not refresh this file The Government Proactive Effort 17 1.Improve the communication between the market player and stake holders of Government Debt Market by doing investor conference call on Thursday, June 13 th 2013 2.Government Debt Buy Back on: June 10 th, 2013 - IDR496,9 bio June 13 th 2013 - IDR499,5 bio June 20th 2013 - IDR500 bio 3.Activate Government Debt Securities mitigation crisis through Bond Stabilization Framework (BSF), by hold a meeting within stakeholders, vice ministry of finance II, and secretariate ministry of state enterprises on Thursday, June 13 th 2013. 4.Daily monitor on Government Debt Market and yield movement. 5.Coordination on financial stability system. Ministry of Finance (Mof)Central Banks (BI) 1.Increase deposit facility interest rate for 25 bps to be 4,25% start from June 12 th, 2013. 2.Increase BI Rate for 25 bps to be 6,00% on June, 13 th,2013. 3.Purchasing on secondary market through auction in June 12 th, 2013 in the amount of IDR 1,2 trillion. Deposit Insurance Company (LPS) 1.Increase guaranteed deposit interest rate to be 5,75% for Rupiah and 1,25% for foreign exchange on commercial banks 2.Increase the deposit interest rate for rural banks to be 8,25%.
Do not refresh this file Government Securities Market Prospects in 2013
Do not refresh this file Government Debt Securities Prospect on 2013 19 1.With the additional target of issuance on Revised Budget 2013, there is an opportunity for the market player to allocate their portfolio on Government Debt on a relative high return comparing to the first semester 2013. Although there’ some risk triggered by external factor such as the QE ending facility that brings the raise on UST, inflation expectation as an impact of the subsidied fuel hike and the exchange rate weakness. 2.The correction yield is deep and estimated had reach the bottom. It is a good opportunity for local and foreign investor to invest on Govenrment Securities. 3.The insurance and pension fund investible asset allocate for Government Debt Securities is relatively low there still more room for investing on Government Debt Securrities. 4.The Government is pro active on developing and maintaining the market stability together with the regulator (BI, OJK dan LPS). 5.Building an intensive communication with the market player in order to deliver the policy responsively. 6.Central Bank (BI) is using Government Securities as monetary tools and will gradually building stock on the government debt and reduce the SBI ownership as mandated on the State Treasury Law. 7.There are policy and initiatives regarding obligation to invest on Government Debt, among others: Basel III application Capital Equivalency Maintained Assets (CEMA) Application Central Banks on Foreign Banks The Establishment of Badan Penyelenggara Jaminan Sosial (BPJS) yang terdiri dari BPJS Kesehatan (instrumen SBN jangka pendek) dan Ketenagakerjaan (instrumen SBN jangka panjang).
Do not refresh this file Capture the color palette to make sure all showing correctly END OF PRESENTATION Directorate General of Debt Management Ministry of Finance of Republic of Indonesia Directorate of Government Securities Frans Seda building, 4 th floor, Jl. Wahidin Raya No. 1, Jakarta Pusat – Postal Code: 10710 Phone: +6221 3810175 Fax. : +6221 3846516 Site: www.djpu.depkeu.go.id