ECONOMICS & FIXED INCOME RESEARCH │23 September 2023

Weekly Economics & Rates Jonathan Gunawan

jonathan.gunawan@trimegah.com
021-2924 9096
WRAP UP FOR THE WEEK ENDED September 23
Fakhrul Fulvian
fakhrul.fulvian@trimegah.com
Pricing in the Dot Plot and Slowing Fiscal Revenue Growth 021-2924 9097

GLOBAL ECONOMY:

This week, the long-awaited FOMC dot plot is out, with the 2024 Fed Fund
Rate dot plot now higher at 5.1% (prev: 4.6%). They do not lift the interest
rate, but it is to be perceived as hawkish, as next year's forecasted interest
rate is higher (please read our reports: Trimegah Economics 20230921 - The
Point of View). However, the current market expectation on the 2024 Fed Asian Currencies (weekly)
Fund Rate is still 4.77%, with 10yr US Treasury yield continuing to be edging (%)

higher to 4.50%, as recent Jobless claim data supports the Fed's Hawkish 0.4 0.3

tone. Our model indicated that, if the UST market to fully priced in the 0.2
0.0
trajectory of interest rate next year, 10yr UST yield may reach 4.65% this 0.0

year. We continue to expect pressure on Indonesia's government bond yield, -0.2 -0.1 -0.1 -0.1

while the oil and gas sector is likely to continue its outperform. -0.4
-0.4
-0.6

From UK, BoE maintained its policy interest rate at 5.25% (cons: 5.50%), -0.8 -0.7
keeping borrowing costs at their highest level since 2008, as policymakers -1.0 -0.9
-0.8

chose a wait-and-see approach in response to the latest inflation and labor THB KRW TWD CNY IDR MYR SGD PHP INR

data, which suggested that the accumulated effects of previous policy

Major currencies (weekly)
tightening were taking effect. Besides that, CPI inflation at 6.7% y-y (cons: (%)
7.0% y-y, prev: 6.8% y-y) in August 2023, the lowest rate since February 0.6 0.50

2022, primarily due to a slowdown in food inflation and a decline in the cost 0.4 0.27
0.2 0.08
of accommodation services. Additionally, the core rate dropped to 6.2% y-y 0.0

(cons: 6.8% y-y, prev: 6.9% y-y), the lowest rate since March. -0.2
-0.20
-0.4 -0.28
-0.6

Next week, there will be Eurozone inflation data (cons: 4.6% y-y, prev: 5.2% -0.8
-1.0
y-y) and US GDP 2Q23 final estimate. Market to digest on prospective inflation -1.2 -1.09
-1.19
data weeks ahead, while downside likely to be limited in Fixed Income -1.4
GBP CHF JPY EUR AUD DXY CAD
instrument once all this hawkishness priced in (10yr UST closed to 4.65%).

DOMESTIC ECONOMY: 10yr Govt Bonds Yield (weekly)

s

(bps)

BI decided to hold the 7DRR at 5.75% in the September Meeting. The current 20

policy decision is sufficient to keep inflation within the targeted range for this 18 17.5

year and next year. BI's new instrument, SRBI already absorbs c.IDR37.72tn 16
14.4
liquidity from two auction regarding the demand, the two SRBI auction has 14

been oversubscribed with 4.25x on the first auction with a total of IDR29.9tn 12
10.3
11.2

and 3.12x on the second auction with a total of IDR15.6tn, reaching a total of 10
8.1 8.4

IDR45.5tn demand from the IDR12tn target (1st auction: IDR7tn, 2nd
8

6 5.6
auction: IDR5tn). 4 3.1
2.3
2

Besides that, 8M23 government fiscal budget realization remains positive at 0

0.0
0.4

IDR147.2tn (0.70% of GDP), with concern on lower government revenue

Philippines Taiwan China Japan Eurozone Malaysia Indonesia South Singapore US Thailand
Korea

trend (Aug-23: -2.95% y-y, July-23: -11.5% y-y). Driver to this was a lower Commodities (weekly)
(%)
customs and excise with -16.8% y-y (8M22: 30.5% y-y), due to lower trade 4.0
activity as the commodity price was lower. Deterioration of growth in 3.24
3.0
government revenue may escalate to concern on bond supply going into next 2.06

year. We suggest government to issue foreign currency denominated bonds 2.0

1.21

as current ratio of FCY bonds to total outstabding bonds already <20%. 1.0
0.19
0.69

0.0
-0.08
TRIMEGAH BOND TRADER COMMENT: -1.0

-2.0
Post FOMC meeting and rising UST yield, the flows were mixed, with Offshore -3.0 -2.49
continue to unload their portfolio until 10yr LCY IDR bond higher than 6.80%, CPO Tins Nickel Gold Coal Copper Brent Oil

while domestic banks start to make some bid once yield becoming attractive,
bringing back 10yr yield to 6.70-6.75% range amid very thin liquidity. Source: Bloomberg

PT Trimegah Sekuritas Indonesia Tbk – www.trimegah.com 1

 Figure 1. Change of Fed Fund Futures Figure 2. US Fed Fund Rate
5.5
6
5.3 5.5

5.1 5
4.9
4
4.7

%
4.5

4.3
2
4.1
1
3.9

3.7 0

4/2022

8/2023
1/2022
2/2022
3/2022

5/2022
6/2022
7/2022
8/2022
9/2022

1/2023
2/2023
3/2023
4/2023
5/2023
6/2023
7/2023
12/2021

10/2022
11/2022
12/2022
3.5
Fed Rate 2023 Fed Rate 2024 Fed Rate 2025 Fed Rate 2026

9/21/2023 9/14/2023 8/21/2023

Source: Bloomberg, Trimegah Research Source: U.S. Bureau of Economic Analysis, Trimegah Research

Figure 3. FOMC Economic Forecast

Median Central Tendency Range
Variable
2023 2024 2025 2026 Longer Run 2023 2024 2025 2026 Longer Run 2023 2024 2025 2026 Longer Run
Change in real GDP 2.1 1.5 1.8 1.8 1.8 1.9–2.2 1.2–1.8 1.6–2.0 1.7–2.0 1.7–2.0 1.8–2.6 0.4–2.5 1.4–2.5 1.6–2.5 1.6–2.5
June projection 1.0 1.1 1.8 1.8 0.7–1.2 0.9–1.5 1.6–2.0 1.7–2.0 0.5–2.0 0.5–2.2 1.5–2.2 1.6–2.5
Unemployment rate 3.8 4.1 4.1 4.0 4.0 3.7–3.9 3.9–4.4 3.9–4.3 3.8–4.3 3.8–4.3 3.7–4.0 3.7–4.5 3.7–4.7 3.7–4.5 3.5–4.3
June projection 4.1 4.5 4.5 4.0 4.0–4.3 4.3–4.6 4.3–4.6 3.8–4.3 3.9–4.5 4.0–5.0 3.8–4.9 3.5–4.4
PCE inflation 3.3 2.5 2.2 2.0 2.0 3.2–3.4 2.3–2.7 2.0–2.3 2.0–2.2 2.0 3.1–3.8 2.1–3.5 2.0–2.9 2.0–2.7 2.0
June projection 3.2 2.5 2.1 2.0 3.0–3.5 2.3–2.8 2.0–2.4 2.0 2.9–4.1 2.1–3.5 2.0–3.0 2.0
Core PCE inflation 3.7 2.6 2.3 2.0 3.6–3.9 2.5–2.8 2.0–2.4 2.0–2.3 3.5–4.2 2.3–3.6 2.0–3.0 2.0–2.9
June projection 3.9 2.6 2.2 3.7–4.2 2.5–3.1 2.0–2.4 3.6–4.5 2.2–3.6 2.0–3.0
Memo: Projected
appropriate policy path
Federal funds rate 5.6 5.1 3.9 2.9 2.5 5.4–5.6 4.6–5.4 3.4–4.9 2.5–4.1 2.5–3.3 5.4–5.6 4.4–6.1 2.6–5.6 2.4–4.9 2.4–3.8
June projection 5.6 4.6 3.4 2.5 5.4–5.6 4.4–5.1 2.9–4.1 2.5–2.8 5.1–6.1 3.6–5.9 2.4–5.6 2.4–3.6
Source: Federal Reserve, Trimegah Research

The Federal Reserve maintained the federal funds rate target range at a 22-year high of 5.25%-5.5% at its September
2023 meeting, following a 25bps boost in July and in line with market expectations, but hinted at another hike this year.
According to the dot-plot projections, there will be one more rise this year, followed by two cutbacks in 2024. Policymakers now predict
that the fed funds rate will be 5.6% this year, the same as in June, and 5.1% (prev: 4.61%) in 2024. Meanwhile, GDP growth is
expected to be greater in 2023 (curr: 2.1% y-y, prev: 1% y-y) and 2024 (curr: 1.5% y-y, prev: 1.1% y-y). PCE inflation was also
raised slightly higher this year to 3.3% y-y (prev: 3.2% y-y) but was maintained at 2.5% y-y for 2024. The core rate is predicted to
fall in 2023 (curr: 3.7% y-y, prev: 3.9% y-y) but remain steady in 2024 (2.6% y-y). The unemployment rate is expected to fall to
3.8% (prev: 4.1%) in 2023 and 4.1% (prev: 4.5%) in 2024.

Please visit this link to view full version of the report: Trimegah Economics 20230921 - The Point of View

Figure 4. US Building Permits Figure 5. US Michigan Consumer Sentiment

95.00

90.00 88.30
84.90 85.5
85.00 82.90
81.80 81.2
1,685 80.70
1,542 1,564 1,512 1,550 79.00
1,496 1,440
80.00
1,430 1,417 76.90 76.80
1,351 1,337 1,339
75.00 72.8
71.7 71.6
70.3 70.6
69.5
70.00 67.4 67.2 67 67.7
65.2 64.9
65.00 62.8 63.5 64.4
62
59.4 58.4 59.9 59.7 59.2
60.00 58.6
58.2
56.8
55.00
51.5
50
Sep-22

Mar-23
Aug-22

Apr-23
Jul-22

Dec-22
Oct-22

Jan-23

Jun-23
Nov-22

Feb-23

May-23

50.00

45.00
Jun-21

Jun-22

Jun-23
Apr-21

Apr-22

Apr-23
Dec-20

Aug-21

Aug-22

Dec-22

Aug-23
Feb-21

Dec-21

Feb-22

Feb-23
Oct-20

Oct-21

Oct-22

US Building Permits

Source: U.S. Census Bureau, Trimegah Research Source: University of Michigan, Trimegah Research

Building permits in the US increased 6.9% y-y in August 2023 to a seasonally adjusted annual rate of 1.543mn (cons:
1.443mn, prev: 1,443mn). Single-family authorizations increased by 2% y-y, while approvals for units in buildings with five or more
units increased by 14.8% y-y. Permits increased 9.3% y-y to 118k, 14.3% y-y to 208k in the Midwest, 3.9% y-y to 843k in the South,
and 9.4% y-y to 374k in the West. National permits declined by 2.7% y-y.

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The University of Michigan consumer sentiment preliminary index for the US declined to 67.7 (cons: 69.1, prev: 69.5) in
September 2023. The figure corresponds to declining optimism among other forward-looking measures, which is consistent with the
Federal Reserve's aggressive tightening campaign and challenges earlier in the third quarter solid growth and light labor market
statistics. The current economic circumstances index decreased considerably to 69.8 (prev: 75.7), as rising food and gasoline prices
harmed consumers' spending power and reduced living standards. Consumers' future expectations, on the other hand, increased to
66.3 (prev: 65.5), underpinned by consumers' predictions that rising inflationary pressures will ease. Year-ahead inflation forecasts
declined to 3.1% y-y in March from 3.5% y-y the previous month, the lowest level since March 2021.

Figure 6. US Jobless Claim

16000 1000

900
14000
800
12000
700
10000
600
person th

person th
8000 500

400
6000
201 300
4000
200
1,662
2000
100

0 0
10/20/2020
10/31/2020
11/11/2020
11/22/2020

12/14/2020
12/25/2020

10/18/2021
10/29/2021

11/20/2021

12/12/2021
12/23/2021

10/16/2022
10/27/2022

11/18/2022
11/29/2022
12/10/2022
12/21/2022
1/5/2021

2/7/2021

3/1/2021

4/3/2021

5/6/2021

6/8/2021

8/2/2021

9/4/2021

1/3/2022

2/5/2022

4/1/2022

5/4/2022

6/6/2022

7/9/2022

9/2/2022

1/1/2023

2/3/2023

3/8/2023

5/2/2023

6/4/2023

7/7/2023

8/9/2023
9/17/2020
9/28/2020
10/9/2020

12/3/2020

1/16/2021
1/27/2021

2/18/2021

3/12/2021
3/23/2021

4/14/2021
4/25/2021

5/17/2021
5/28/2021

6/19/2021
6/30/2021
7/11/2021
7/22/2021

8/13/2021
8/24/2021

9/15/2021
9/26/2021
10/7/2021

11/9/2021

12/1/2021

1/14/2022
1/25/2022

2/16/2022
2/27/2022
3/10/2022
3/21/2022

4/12/2022
4/23/2022

5/15/2022
5/26/2022

6/17/2022
6/28/2022

7/20/2022
7/31/2022
8/11/2022
8/22/2022

9/13/2022
9/24/2022
10/5/2022

11/7/2022

1/12/2023
1/23/2023

2/14/2023
2/25/2023

3/19/2023
3/30/2023
4/10/2023
4/21/2023

5/13/2023
5/24/2023

6/15/2023
6/26/2023

7/18/2023
7/29/2023

8/20/2023
8/31/2023
9/11/2023
Weekly continuing jobless claims Weekly new jobless claims 4 weeks MA new jobless claims (RHS)

Source: U.S. Department of Labor, Trimegah Research

The number of US initial jobless claims at 201k (cons: 225k, prev: 221k) in the week ending September 16th. Meanwhile,
continuing claims declined by 21,000 in the previous week to a near eight-month low of 1,662,000, indicating that the unemployed
are having an easier time finding new jobs. The statistics contributed to evidence that the labor market is still at historically tight
levels, indicating extra resilience to the Federal Reserve's aggressive tightening cycle and providing room for a November raise. The
four-week moving average for initial claims declined by 7,750 to 217,000, removing week-to-week volatility. Meanwhile, non-
seasonally adjusted initial claims increased by 67 people to 175,661 as steep declines in Indiana (-2,725) and California (-1,174)
offset gains in New York (+1,459) and Georgia (+1,357).

Figure 7. Eurozone CPI Inflation Figure 8. BoE Interest Rate

50 12
6
5.25
40 10
5
30 8
5.20
-3.30 4
20 6
(%)

(%)

(%)

10 4 3

0 2 2

-10 0
1

-20 -2
Mar-10

Mar-11

Mar-12

Mar-13

Mar-14

Mar-15

Mar-16

Mar-17

Mar-18

Mar-19

Mar-20

Mar-21

Mar-22

Mar-23
Sep-10

Sep-11

Sep-12

Sep-13

Sep-14

Sep-15

Sep-16

Sep-17

Sep-18

Sep-19

Sep-20

Sep-21

Sep-22

0
10/2021

12/2021

10/2022

12/2022
6/2021

8/2021

2/2022

4/2022

6/2022

8/2022

2/2023

4/2023

6/2023

8/2023

EU Inflation (y-y) (RHS) EU Energy Inflation (y-y)

Source: Eurostat, Trimegah Research Source: BoE, Trimegah Research Series1

Peringata
Annual CPI inflation in the Eurozone was lowered down to 5.2% y-y (cons: 5.3% y-y, prev: 5.5% y-y) in August 2023,
the lowest number since January 2022. Inflation was considerably higher a year ago, at 9.1% y-y, but it is still more than double
the ECB objective of 2% y-y. The core rate was slightly increased to 5.3% y-y (cons: 5.3% y-y, prev: 5.5% y-y). The cost of services
was the most expensive in August (curr: 5.5% y-y, prev: 5.6% y-y), followed by food, wine, and tobacco (curr: 9.7% y-y, prev:
10.8% y-y) and non-energy industrial items (curr: 4.7% y-y, prev: 5% y-y). Energy prices fell further, albeit at a considerably slower
rate (curr: -3.3% y-y, prev: -6.1% y-y). On a monthly basis, the CPI increased by 0.5% m-m (cons: 0.6% m-m, prev: -0.1% m-m).
The ECB recently changed its inflation predictions for 2023 to 5.6% y-y and 2024 to 3.2% y-y, owing principally to an increase in the
trajectory of energy costs. Inflation is expected to average 2.1% y-y in 2025, according to the central bank.

On September 21st, the BoE maintained its policy interest rate at 5.25% (cons: 5.50%), keeping borrowing costs at their
highest level since 2008, as policymakers chose a wait-and-see approach in response to the latest inflation and labor
data, which suggested that the accumulated effects of previous policy tightening were taking effect. Following the central
bank's extraordinary 515bps rise, it was the first halt in policy tightening in over two years. The Monetary Policy Committee voted 5-
4 to keep rates constant, with four members arguing for another 25bps hike. The central bank also indicated that CPI inflation is
projected to fall considerably in the short term, owing to reduced energy inflation despite resumed upward pressure from oil prices,
as well as additional falls in food and core goods price inflation. Policymakers have reaffirmed their willingness to tighten policy further
if required.
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DOMESTIC ECONOMY:

Figure 9. Taylor’s Rule Equation Model

14.00

12.00

4.71
10.00
5.75

8.00
%

6.00

4.00

2.00

0.00
Mar-06

Mar-07

Mar-08

Mar-09

Mar-10

Mar-11

Mar-12

Mar-13

Mar-14

Mar-15

Mar-16

Mar-17

Mar-18

Mar-19

Mar-20

Mar-21

Mar-22

Mar-23
Nov-05

Jul-06
Nov-06

Jul-07
Nov-07

Jul-08
Nov-08

Jul-09
Nov-09

Jul-10
Nov-10

Jul-11
Nov-11

Jul-12
Nov-12

Jul-13
Nov-13

Jul-14
Nov-14

Jul-15
Nov-15

Jul-16
Nov-16

Jul-17
Nov-17

Jul-18
Nov-18

Jul-19
Nov-19

Jul-20
Nov-20

Jul-21
Nov-21

Jul-22
Nov-22

Jul-23
Theoretical 7D Rev Repo Rate 7DRR

Source: Bank Indonesia, Trimegah Research

BI decided to hold the 7DRR at 5.75% in the September Meeting. The current policy decision is sufficient to keep inflation within
the targeted range for this year and next year. Furthermore, the overnight deposit facility and loan facility rates remained unchanged
at 5.00% and 6.50%, respectively. BI also remained focused on maintaining the rupiah's stability in the face of increasing challenges
from global financial market uncertainty. Meanwhile, inflation jumped to 3.27% y-y in August, but stayed within the central bank's
goal range of 2%-4% y-y, while the domestic economy remained solid, with GDP growth forecast for 2023 remaining between 4.5%-
5.3% y-y.

Please visit this link to view full version of the report: Trimegah Economics 20230922 – Monetary Update

Figure 10. 8M23 State Budget Realization

As of As of
Growth % of APBN Growth
Categories (in IDR tn) August APBN 2023 August
(%) 2023 (%)
2022 2023

A. Government Revenue 1,764.4 49.8 2,463.0 1,821.9 74.0 3.3

I. Tax Revenue 1,378.0 53.2 2,021.2 1,418.6 70.2 2.9
1. Tax 1,171.8 58,1 1,718.0 1,247.0 72.6 6.4
2. Customs and Excise 206.2 30.5 303.2 171.6 56.6 -16.8
II. Non-Tax Revenue 386.1 39.0 441.4 402.8 91.3 4.3
B. Government Expenditure 1,656.7 6.1 3,061.2 1,674.7 54.7 1.1
I. Central government (BPP) 1,177.9 8.3 2,246.4 1,170.7 52.1 -0.6
1. Ministry/institutions (K/L) expenditure 575.8 -8.4 1,000.8 581.6 58.1 1.0
2. Non-Ministry/institutions (non-K/L) expenditure 602.1 31.1 1,245.6 589.1 47.3 -2.2
II. Transfer to Regions and Village Funds (TKDD) 478.9 1.3 814.7 503.9 61.9 5.2
C. Primary Balance 342.6 301.7 -156.8 422.1 -269.2 23.2
D. Surplus/(Deficit) 107.7 128.2 -598.2 147.2 -24.6 36.7
% of GDP 0.55 -2.84 0.70
E. Budget Financing 287.9 -45.8 598.2 160.1 26.8 -44.4
Source: APBN KiTa September 2023, Trimegah Research

The Indonesia fiscal balance until the end of August still recorded a surplus of IDR147.2tn or 0.7% of GDP. If we look at
the primary balance, we are also in a surplus position of IDR422.1tn. The APBN surplus as of August 2023 comes from state revenue
which reached IDR1,821.9tn. Revenue was recorded as growing 3.2% y-y and reached 74% of the 2023 budget. On the other hand,
state spending also grew 1.1% y-y to IDR 1,674.7 trillion and reached 54.7% of the 2023 budget.

PT Trimegah Sekuritas Indonesia Tbk – www.trimegah.com 4

SRBI already absorbs c.IDR37.72tn liquidity from two auction. Regarding the demand, the two SRBI auction has been
oversubscribed with 4.25x on the first auction with a total of IDR29.9tn and 3.12x on the second auction with a total of IDR15.6tn,
reaching a total of IDR45.5tn demand from the IDR12tn target (1st auction: IDR7tn, 2nd auction: IDR5tn). The total liquidity that has
been absorbed by SRBI is c.IDR37.72tn. The awarded portion that BI gives is relatively high with overall bid-to-cover-ratio at c.1.2x
as the function of the SRBI instrument is Pro-Market. The secondary transaction has been recorded at a value of IDR2.13tn, with
c.82% traded by non-residents. Noted that until July 2023, Banks' TPF reached IDR8,064tn (+6.62% y-y) and Loan disbursement
reached IDR6,635tn (+8.54% y-y), resulting in the LDR reached 82.9% (7M22: 81.43%).

The government will disburse palm oil profit-sharing funds (DBH) to 350 regions from September until December 27,
2023 (Riau: IDR83.13bn, North Sumatra: IDR74.86 bn, West Kalimantan: IDR65.66bn, Central Kalimantan: IDR60bn,
and South Sumatra: IDR51.2bn). Of the DBH, 80% will be allocated for road infrastructure construction and maintenance, while
the remaining 20% will support other activities.

PT Trimegah Sekuritas Indonesia Tbk – www.trimegah.com 5

DOMESTIC BOND MARKET:

Government bond ownership flow:

For the week of September 19th, 2023, bank recorded outflow of IDR28.1tn to the government bond, making down to IDR1,677tn or
~30.7% of total ownership in the government bond. Moreover, the central bank recorded an outflow of IDR7.8tn to the total IDR880tn
or ~16.1% of total ownership of the government bond. From the non-bank investor classification, outflow recorded at IDR1.1tn to the
total of IDR2,897tn or ~53.1% ownership from total. Foreign investors see outflow of IDR4.4tn this week to the total of IDR836tn or
~15.3% of government bond ownership to total.

Figure 11. Ownership of Indonesia’s government bond

w-w changes
(IDR tn) 31/12/2021 30/12/2022 31/08/2023 12/09/2023 19/09/2023 Ytd Changes
(IDRtn)
Bank 1,591 1,697 1,714 1,705 1,677 -28.1 -20.6
Central Bank (Net) 801 1,020 885 888 880 -7.8 -139.6
Central Bank (Gross) 1,221 1,454 1,361 1,360 1,359 -1.4 -94.5
Non-Bank 2,286 2,592 2,905 2,898 2,897 -1.1 305.4
Mutual Fund 158 146 181 181 181 -0.4 35.0
Insurance and Pension Fund 655 873 986 990 995 5.3 121.8
Non-Resident 891 762 846 840 836 -4.4 73.8
Individual 221 344 384 376 377 0.9 32.8
Others 360 467 508 511 509 -2.5 42.1
Total 4,679 5,309 5,505 5,492 5,455 -37.0 145.2

w-w changes
In % 31/12/2021 30/12/2022 31/08/2023 12/09/2023 19/09/2023 Ytd Changes
(in %)

Bank 34.0 32.0 31.1 31.0 30.7 -0.30 -1.2

Central Bank (Net) 17.1 19.2 16.1 16.2 16.1 -0.03 -3.1
Central Bank (Gross) 26.1 27.4 24.7 24.8 24.9 0.14 -2.5
Non-Bank 48.9 48.8 52.8 52.8 53.1 0.34 4.3
Mutual Fund 3.4 2.7 3.3 3.3 3.3 0.02 0.6
Insurance and Pension Fund 14.0 16.4 17.9 18.0 18.2 0.22 1.8
Non-Resident 19.0 14.4 15.4 15.3 15.3 0.02 1.0
Individual 4.7 6.5 7.0 6.9 6.9 0.06 0.4
Others 7.7 8.8 9.2 9.3 9.3 0.02 0.5
Total 100.0 100.0 100.0 100.0 100.0 0.0 0.0

Source: DJPPR, Trimegah Research

Figure 12. Trading activity on government bonds

10.0 6.78
7.1
6.5
5.4
5.0 3.8 6.77 6.76
2.3
1.5 1.3
0.6 0.4 0.6 0.9 0.5
0.1 0.2 0.2 0.1 0.1 0.3 0.0 0.2 6.74
0.0
0.0 6.72 0.0 -0.4
-1.5 -1.4 -1.7 -1.2 -1.6
-2.5 6.72
-2.9
-5.0 -3.6
-4.9
-6.6 6.70
-10.0
(IDRtn)

(%)
-10.7 6.69 6.68

-15.0
6.66

-20.0 6.65
6.64
6.64
-25.0
6.62

-30.0 6.60
-29.5

-35.0 6.58
13/09/2023 14/09/2023 15/09/2023 18/09/2023 19/09/2023
Bank Central Bank Mutual Fund Insurance and Pension Fund Non-Resident Individual Others 10yr ID govt Bond

Source: DJPPR, Trimegah Research

The government issued IDR15.80tn of government bonds (prev: IDR13.20tn) through this week’s auction, with details as follows:
FR0095 with an average yield of 6.37971%, FR0100 with an average yield of 6.72993%, FR0098 with an average yield of 6.91984%,
FR0097 with an average yield of 6.93904%, and FR0089 with an average yield of 6.99977%.

The demand for our government bond in today’s auction slightly increased to IDR28.79tn (prev: IDR20.02tn). In detail, more than
half of the bid or ~62.0% of today’s bid goes to the 11yr (FR0100) and 15yr (FR0098); where this was followed by bids on the 20yr
bond (FR0097), the 5yr bond (FR0095), the 28yr bond (FR0089), 1yr bond (SPN12240919), and 3 month (SPN03231220).

Foreign investors recorded the incoming bid of IDR2.1tn (prev: IDR1.7tn), while the awarded to foreign was the lowest since September
2022 at IDR0.7tn (prev: IDR1.0tn). The overall bid-to-cover ratio was booked at 1.82x (prev: 1.52x). Post this issuance, we estimate
the gross issuance this year has reached ~85.19%.

Post SRBI release, looks like the demand not decreasing but instead improving along with the higher yield. As we stated in last week's
government sukuk result, the demand will back if the price is good. For example, the FR0100 with a 6.73% average yield demand is
IDR11.80tn, while with a 6.41% average yield, the demand is only IDR9.02tn. We believe the demand will be back as the Yield Curve
Normalized into Steepening. We have our 10yr government bond yield target at 6.50%.

From the SRBI, we see that the demand is more likely to affect the money market than the government bond, knowing the current
bank's TD rate is still much lower than the benchmark rate (historically should be premium).

*Based on the last presentation from DJPPR, uploaded September 5th, 2023
PT Trimegah Sekuritas Indonesia Tbk – www.trimegah.com 6
 Figure 13. Total government bond issuance realization
Series Coupon (%) Maturity Avg. Yield (%) Incoming Bids (IDR tn) Total Issuance (IDR tn) Bid-to-cover Ratio
SPN03231220 D 20-Dec-23 - 0.43 - -
SPN12240919 D 19-Sep-24 - 0.53 - -
FR0095 6.38 15-Aug-28 6.38 4.10 1.80 2.28
FR0100 6.63 15-Feb-34 6.73 11.80 7.85 1.50
FR0098 7.13 15-Jun-38 6.92 6.05 2.05 2.95
FR0097 7.13 15-Jun-43 6.94 4.33 3.40 1.27
FR0089 6.88 15-Aug-51 7.00 1.56 0.70 2.23
28.79 15.80 1.82

Source: DJPPR, Trimegah Research

Figure 14. Foreign Incoming Bid and Awarded Figure 15. Foreign Incoming Bid and Awarded Historical
Foreign Incoming Bid (LHS) Awarded to foreigner (LHS) Foreign Incoming Bid (%) (RHS)
28 30%
(IDRtn)

Series Foreign incoming bid (IDRtn) Awarded to foreign (IDRtn)

23 25%
SPN03231220 - -
SPN12240919 0.03 - 18 20%

FR0095 0.5 0.1

13 15%

FR0100 0.8 0.5

FR0098 0.7 0.1 8 10%
7.23%

FR0097 0.1 - 3 2.1 5%

0.7
FR0089 0.02 0.01

9/8/2020

10/6/2020

11/3/2020

12/1/2020

1/19/2021

2/16/2021

3/16/2021

4/13/2021

5/25/2021

6/22/2021

7/21/2021

8/18/2021

9/14/2021

1/4/2022

2/2/2022

3/1/2022

3/28/2023

5/16/2023

6/13/2023

7/11/2023

8/8/2023

9/5/2023
10/12/2021

3/29/2022

5/10/2022

6/7/2022

7/5/2022

8/2/2022

8/30/2022

9/27/2022

1/3/2023
10/25/2022

11/22/2022

1/31/2023

2/28/2023
-3 0%
Total 2.08 0.73

Source: DJPPR, Trimegah Reserach

Source: MoF, Trimegah Research Source: DJPPR, Trimegah Research

Figure 16. Total government issuance realization

Sept 19th, 2023 (IDRtn) Budget 2023 Budget Realization % Realization to Budget
Issuance Need 712.9 607.31 85.19

Government Debt Securities 413.87

IDR Denominated GDS 354.94
Coupon GDS 261.82
T-Bills 31.15
Retail Bonds 51.08
Private Placement 10.89
Foreign Denominated Bonds 58.93
SEC USD-EUR (- Buyback LM) 46.77
Samurai Bonds 11.24
USD Onshore Bonds
SDG Bonds
Valas Voluntary Disclosure Program 0.92
Sovereign Sharia Securities (Sukuk) 193.44
Domestic Sovereign Sharia Securities (Sukuk) 193.44
IFR/PBS/T-bills Sukuk 154.00
Retail Sukuk 36.61
Private Placement 2.83
Global Sukuk
Total 607.31
Source: DJPPR, Trimegah Research

PT Trimegah Sekuritas Indonesia Tbk – www.trimegah.com 7

 Figure 17. Total government bond bid and awarded
140.0

120.0 116.1

107.8
104.7

100.0 97.2 95.6

94.3

83.0 83.8 83.4 84.8

80.7
78.278.5 77.6 76.8 76.2
80.0
71.8 72.1 72.2
70.0 70.1
(IDR tn)

69.5
66.3 67.1 65.5
60.8 61.5
58.8 59.1 58.4
60.0 56.0
52.8 52.1 52.7
49.7 49.0 50.2 49.2
46.0 47.8
43.0 43.5 45.0
41.640.1 42.3
40.1 39.4
36.9 37.6
40.0 35.1 34.6
41.040.0 29.5 30.3 28.3 29.3 31.032.5
27.7 28.8
35.0 26.0
32.8 32.634.0 34.034.034.0 22.1 23.0
29.5 30.0 30.0 30.0 19.7 20.0
28.1 17.1
20.0 24.625.6 24.2 25.025.025.023.0 15.0
23.023.0
19.8 21.021.0 20.0 18.9 21.7 20.020.020.020.0
18.9 19.017.317.1 19.1 19.019.0 19.2
17.0 17.0 15.215.5 16.115.015.015.014.0 15.8
12.0 13.811.9 12.2 13.013.0 13.2
11.0 10.8 10.0 9.9
8.0 8.0 7.8 8.2 7.9
0.0
11/3/2020

12/1/2020

1/19/2021

2/16/2021

3/16/2021
3/30/2021
4/13/2021
4/27/2021
5/25/2021

6/22/2021

7/21/2021

8/18/2021
8/31/2021
9/14/2021
9/28/2021

1/18/2022

2/15/2022

3/15/2022
3/29/2022
4/12/2022
5/10/2022
5/24/2022

6/21/2022

7/19/2022

8/16/2022
8/30/2022
9/13/2022
9/27/2022

11/8/2022

12/6/2022

1/17/2023
1/31/2023
2/14/2023
2/28/2023
3/14/2023
3/28/2023
4/11/2023
5/16/2023
5/29/2023
6/13/2023
6/27/2023
7/11/2023
7/25/2023

8/22/2023

9/19/2023
10/20/2020

11/17/2020

1/5/2021

2/2/2021

3/2/2021

6/8/2021

7/6/2021

8/3/2021

10/12/2021
10/26/2021
1/4/2022

2/2/2022

3/1/2022

6/7/2022

7/5/2022

8/2/2022

10/11/2022
10/25/2022

11/22/2022

1/3/2023

8/8/2023

9/5/2023
Total awarded Total bid

Source: DJPPR, Trimegah Reserach

Source: DJPPR, Trimegah Research

Several rating updates from the corporate bond market:

No Corporate Bond Type Before After Outlook

1 PT Indah Kiat Pulp & Paper Tbk

Obligasi Berkelanjutan I Indah Kiat Pulp & Paper Tahap II Tahun 2020 Seri B A+ Withdrawn

2 PT Bank CIMB Niaga Tbk

Obligasi Berkelanjutan II Bank CIMB Niaga Tahap IV Tahun 2018 Seri C AAA Withdrawn

3 PT Jakarta Lingkar Baratsatu

Obligasi I Jakarta Lingkar Baratsatu Tahun 2018 Seri B AA- Withdrawn

*PEFINDO has withdrawn the ratings based on the full repayment of the debt instrument.

**PEFINDO has withdrawn company's rating based on the company's request

***PEFINDO will closely monitor settlement of the Company's bond and sukuk related to postponement of coupon payment

Important event next week

• Mon: US New Home Sales, Indonesia M2 Money Supply YoY
• Tue: US Conf. Board Consumer Confidence
• Wed: US Durable Goods Orders, US MBA Mortgage Applications
• Thu: US Initial Jobless Claims, US GDP Annualized QoQ
• Fri: US U. of Mich. Sentiment, US Personal Income, US Personal Spending, US MNI Chicago PMI, Euro CPI MoM, Japan Industrial
Production MoM, Japan Jobless rate, Japan Tokyo CPI Ex-Fresh Food YoY, Japan Job0To-Applicant Ratio, Japan Tokyo CPI YoY.
Japan retail sales YoY

Figure 18. Real yield data

Sovereign Rating 10yr Govt. Bond Yield (%) Expected Expected
Country Weekly Change (%) YTD Change (%) Inflation y-y Real Yield
Moodys Fitch S&P 12/31/2021 9/14/2023 9/21/2023 Inflation ('23) Inflation ('24)
Indonesia Baa2 ​BBB ​BBB 6.38 6.64 6.79 2.26 6.42 3.27 3.52 3.70 2.96
Malaysia A3 BBB+ A- 3.58 3.88 3.98 2.42 11.09 2.00 1.98 2.90 2.50
Philippine Baa2 BBB BBB+ 3.87 5.40 5.40 0.00 39.59 5.30 0.10 5.60 3.20
Thailand Baa1 BBB+ BBB+ 1.89 2.98 3.14 5.54 65.98 0.88 2.26 1.80 2.00
South Korea Aa2 AA- AA 2.23 3.92 4.02 2.42 80.46 3.40 0.62 3.40 2.20
India Baa3 BBB- BBB- 6.45 7.13 7.16 0.46 10.99 6.83 0.33 6.60 5.40
Vietnam Ba3 BB BB 3.42 2.60 2.60 0.00 -23.98 2.96 -0.36 3.00 3.00
China A1 A+ A+ 2.78 2.63 2.68 1.59 -3.71 0.10 2.58 0.64 3.00
South Africa Ba2 BB- BB- 9.81 12.05 12.18 1.07 24.10 4.80 7.38 5.80 3.00
Brazil Ba2 BB- BB- 10.84 11.20 11.45 2.26 5.68 4.61 6.84 4.73 3.00
Mexico Baa1 BBB- BBB 7.56 9.60 9.76 1.61 29.16 4.64 5.12 5.50 3.00
Ukraine B3 B B 8.88 29.15 28.72 -1.47 223.42 8.60 20.12 16.35 3.00
Russia Baa3 BBB BBB- 8.45 15.99 15.99 0.00 89.28 5.15 10.84 5.60 3.00

Source: Bloomberg, Trimegah Research

PT Trimegah Sekuritas Indonesia Tbk – www.trimegah.com 8

 200
400
500
600
700

300
(bps)
Jan-18
Mar-18
May-18
Jul-18
Sep-18
Nov-18
Jan-19
Figure 19. Yield Spread data

Mar-19

Source: Bloomberg, Trimegah Research

May-19
Jul-19
Sep-19
Nov-19

PT Trimegah Sekuritas Indonesia Tbk – www.trimegah.com

Jan-20
Mar-20
May-20

10Y INDOGB vs 10Y UST (bps)

Jul-20
Sep-20
Nov-20
Jan-21

Average
Mar-21
May-21
Jul-21
Sep-21

+stdev
Nov-21
Jan-22
Mar-22
May-22
-stdev

Jul-22
Sep-22
Nov-22
Jan-23
Mar-23
May-23
Jul-23

9
Sep-23
 Research Team
Fakhrul Fulvian Chief Economist fakhrul.fulvian@trimegah.com +62-212924 9097
Willinoy Sitorus Head of Research willinoy.sitorus@trimegah.com +62-212924 9105
Jonathan Gunawan Research Associate jonathan.gunawan@trimegah.com +62-212924 9096

FIT Institutional Sales Team

Anung Rony Hascaryo Head of FIT Institutional Sales anung.hascaryo@trimegah.com +62-21 2924 9127
Sigit Indriyatma FIT Institutional Sales sigit.indriyatma@trimegah.com +62-21 2924 9125
Kreshna Narendra Ksatriya FIT Institutional Sales kreshna.ksatriya@trimegah.com +62-21 2924 9126
Ricky Christener FIT Institutional Sales ricky.christener@trimegah.com +62-21 2924 9126

Individual & Distribution Channel Fixed Income Trading

Individual & Distribution Channel Fixed
Legazea Syifa Al’ala legazea.syifa@trimegah.com +62-21 2924 9126
Income Trading
Individual & Distribution Channel Fixed
Diantina Rachmawati diantina.rachmawati@trimegah.com +62-21 2924 9126
Income Trading

Disclaimer

This report has been prepared by PT Trimegah Sekuritas Indonesia Tbk on behalf of itself and its affiliated
companies and is provided for information purposes only. Under no circumstances is it to be used or
considered as an offer to sell, or a solicitation of any offer to buy. This report has been produced
independently and the forecasts, opinions and expectations contained herein are entirely those of PT
Trimegah Sekuritas Indonesia Tbk.

While all reasonable care has been taken to ensure that information contained herein is not untrue or
misleading at the time of publication, PT Trimegah Sekuritas Indonesia Tbk makes no representation as to
its accuracy or completeness and it should not be relied upon as such. This report is provided solely for the
information of clients of PT Trimegah Sekuritas Indonesia Tbk who are expected to make their own
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 Analysts Certification

The research analyst(s) of PT Trimegah Sekuritas Indonesia Tbk. primarily responsible for the content of
this research report, in whole or in part, certifies that with respect to the companies or relevant securities
that the analyst(s) covered in this report: (1) all of the views expressed accurately reflect his or her personal
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