GOVERNMENT SECURITIES MANAGEMENT - … · -Samurai Bonds*** 12.839.730 -USD Onshore ... Surat...
Transcript of GOVERNMENT SECURITIES MANAGEMENT - … · -Samurai Bonds*** 12.839.730 -USD Onshore ... Surat...
GOVERNMENT SECURITIES
MANAGEMENTAUGUST 8, 2018
DIRECTORATE OF GOVERNMENT DEBT SECURITIESDIRECTORATE GENERAL OF BUDGET FINANCING AND RISK MANAGEMENTMINISTRY OF FINANCE OF THE REPUBLIC OF INDONESIA
DEBT FINANCING STRATEGY
Directorate of Government Debt SecuritiesDirectorate General of Budget Financing and Risk Management| Ministry of Finance of The Republic of Indonesia
2018 FINANCING NEEDFulfilled from Government Securities IDR730.2 tn (92%) and Loan IDR63.1 tn (8%)
Domestic Debt
IDR595.5 tn
(75%)
Foreign
Denominated Debt
IDR197.8 tn
(25%)
Domestic GS
IDR591.0 tn
Budget
Deficit
IDR325.9 tn
Matured
Debt
IDR394.1 tn
Investment
Financing
IDR65.7 tn
Guarantee
IDR1.1 tn
Loan
IDR6.7 tn
Other
Financing
(IDR0.2 tn)
Financing
Need
IDR793.3
tn
Domestic Loan
IDR4.5 tn
Foreign Loan
(Program &
Project)
IDR58.5 tn
Foreign
Denominated
Bonds
(JPY, EUR, USD)
IDR139.3 tn
GS (SBN) Gross
IDR591.0 tn(Domestic)
IDR139.2 tn(Foreign)
IDR92.0 tn
(SPN/S CM)
∑ IDR822.2tn
Loan Gross
IDR4.5tn (Domestic)
IDR58.6tn (Foreign)
∑ IDR63.1tn
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GOVERNMENT SECURITIES INDICATIVE FINANCING PLAN FOR 2018
70% - 75%
25% - 30%
Government Debt Securities Government Sukuk
Government Securities to Meet State Budget Financing Domestic Government Securities
Weekly auction:
Conventional securities 25x
Islamic securities 24x
Non-Auction
Retail bonds (ORI, Retail Sukuk, Online Retail Bonds)
Private PlacementBased on request
Target avg. tenor maturity for Government Securities Issuance
7-8 yearsIssuance Targets for Government Securities
International Government Securities
InstrumentsIndicative Budget Target*
IDR Tn USD Bn
Budget Deficit (2.19%) 325.9 24.3
Government Securities (Net) 407.4 30.4
Government Securities (Gross) 822.2 61.4
Composition
Domestic Government Securities 80 - 83%
International Government Securities 17 - 20%
*exchange rate assumption in 2018 budget: IDR13,400/USD
USD
Sukuk USD
EUR
JPY
Avoid crowding out indomestic market
Provide benchmarks forcorporate bonds
Investor basediversification
4
2018 GOVERNMENT SECURITIES
FINANCING REALIZATION
(In Million IDR)
*Global Bonds issuance (prefunding) using SEC format amounted USD4 bn and USD1 bn** EURO issuance using SEC format amounted EUR1 bn*** Samurai Bonds issuance amounted JPY100 bn
5
Budget 2018Budget Realization
(as of August 7, 2018)
% Realization to
Budget 2018
Government Securities Net 407.484.526 240.297.774 58,97%
Issuance Need for 2018 822.269.800 527.241.895 64,12%
Government Debt Securities (GDS) 368.025.611
IDR Denominated GDS 270.148.066
-Coupon GDS 157.420.000
-Conventional T-Bills 105.400.000
-Private Placement 5.400.000
-Retail Bonds 1.928.066
Foreign Denominated Bonds 97.877.545
-SEC USD* 68.068.000
-SEC Euro** 16.969.815
-Samurai Bonds*** 12.839.730
-USD Onshore Bonds -
Sovereign Sharia Securities (Sukuk) 159.216.284
Domestic Sovereign Sharia Securities 117.837.284
- IFR/PBS/T-Bills Sukuk (Islamic Fixed Rated Bond/Project Based Sukuk) 100.250.714
- Retail Sukuk 8.436.570
- Private Placement 9.150.000
Global Sukuk 41.379.000
GOVERNMENT SECURITIES PERFORMANCE
Directorate of Government Debt SecuritiesDirectorate General of Budget Financing and Risk Management| Ministry of Finance of The Republic of Indonesia
GDS* PRIMARY MARKET PERFORMANCE 2017-2018THROUGH AUCTION (AS OF JULY 31, 2018)
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• Average incoming bid for GDS in 2018 = IDR40.18 tn/auction while average awarded bid for GDS in 2018 = IDR17.97 tn/auction
• The first auction in 2018 recorded highest incoming bid ever, amounted IDR86.2 tn or equiv. USD6.39 bn (JISDOR a.o. Jan. 3, 2018 =
IDR13,498/USD)
*) Surat Utang Negara (SUN)7
2,44
1,93 2,01
2,62
2,38
1,31
1,83
2,80
3,16
1,76 2,01
3,00
1,97 1,86
1,57
2,58 2,50
2,05
0,00
0,50
1,00
1,50
2,00
2,50
3,00
3,50
4,00
0
50
100
150
200
250Incoming Bids Awarded Bids % Bid to Cover Ratio (RHS)
[In Trillion IDR ]
Average
Incoming
Bid 2017 =
IDR39.72T/
auction
Average
Awarded
Bid 2017 =
IDR17.61T/
auction
2,67
2,00
2,07
2,81
2,37
2,04 1,98
2,83
3,36
1,84
2,12
2,95
1,92
1,78 1,85
2,48
2,16
1,99 2,11
-
0,50
1,00
1,50
2,00
2,50
3,00
3,50
4,00
-
50
100
150
200
250
300Incoming Bids Awarded Bids % Bid to Cover Ratio (RHS)
GS* PRIMARY MARKET PERFORMANCE 2017-2018THROUGH AUCTION (AS OF AUGUST 7, 2018)
*) Surat Berharga Negara (SBN)
Average
Incoming
Bid 2017 =
IDR27.99T/
auction
Average
Awarded
Bid 2017 =
IDR11.74T/
auction
[In Trillion IDR ]
Average incoming bid for GS in 2018 = IDR27.33 tn/auction while Average awarded bid for GS in 2018 = IDR12.38 tn/auction
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REPUBLIC OF INDONESIA JPY100BN 3YR, 5YR, 7YR
and 10YR FIXED SAMURAI BONDS
9
SEC-REGISTERED SHELF EUR1bn 7-YEAR and
USD1bn 10-YEAR ISSUANCE
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Breakdown of Distribution by Geography Breakdown of Distribution by Investor Type
EUR 7-year USD 10-yearEUR 7-year USD 10-year
US50%
Asia ex-Indonesia
24%
Indonesia7%
Europe19%
Indonesia12%
Asia ex-Indonesia
15%
UK16%
Germany17%
France5%
Italy13%
Switzerland4%
Rest of Europe
11%
US7%
Asset Managers
50%
Central Banks / SWFs18%
Banks15%
Insurance / Pension
16%
Private Banks
1%Asset Managers
61%
Central Banks / SWFs
4%
Banks23%
Insurance / Pension
11%
Private Banks
1%
Pricing Date: 17 April 2018
Issuer: Republic of Indonesia
Issue Rating: Baa2 (Moody’s) / BBB- (S&P) / BBB (Fitch)
Issue: Senior Unsecured, Fixed Rate Notes
Format: SEC-registered
Settlement Date: 24 April 2018
Currency: EUR USD
Tenor: 7-year 10-year
Maturity Date: 24 April 2025 24 April 2028
Tranche Size: EUR1bn USD1bn
Benchmark Yield: 0.630% (MS) 2.816% (UST)
Spread to Benchmark: MS+115bps UST+131.4bps
Re-offer Yield: 1.780% 4.130%
Coupon: 1.750% 4.100%
Listing: SGX-ST, Frankfurt Stock Exchange
Terms: USD200k/1k denoms, New York law
Joint Bookrunners: CA-CIB / Deutsche Bank / GS / HSBC / Mandiri
Billing & Delivery: Deutsche Bank
Capitalizing on the positive tone following Moody’supgrade of the sovereign rating to Baa2 from Baa3 on 13April 2018, the Republic launched the USD tranche on 16April 2018 Asia morning and the EUR tranche on Europeopen
Started at 4.40% area Initial Price Guidance, the USD1bn10-year tranche was eventually priced at 4.13%,representing a 27bps compression from start to finish
Similarly, the EUR1bn 7-year tranche was launched atMS+137.5bps area and compressed 22.5bps to price atMS+115bps
Total orderbook was 2.9x oversubscribed at Final PriceGuidance, with EUR3.0bn orders on the EUR tranche andUSD2.7bn orders on the USD tranche
Diversification of investor base – 179 total accounts onthe EUR tranche and 136 accounts on the USD tranche
Transaction Highlights
Republic of Indonesia’s
inaugural SEC Shelf
takedown
At MS+115bps (1.750%), the
EUR tranche represents the
lowest-ever EUR cost of
funding for the Republic
The transaction achieved the
sovereign’s funding
objectives with limited New
Issue Concessions
5bps on the EUR and 10bps
USD tranches
P
P
P
10
Sukuk Global Issuance – USD3 bn
Trust Certificates due 2023 and 2028
On February 22, 2018, the Republic of Indonesia successfully priced an international sukuk offering totaling USD3 bn, including its debut offering in green format. Summary Terms of Offering
Obligor The Government of the Republic of Indonesia, represented by the Ministry of Finance
Issuer Perusahaan Penerbit SBSN Indonesia III
Issuer Rating Baa3 Moody’s (Positive) / BBB- S&P (Stable) / BBB Fitch (Stable)
Exp. Issue Rating Baa3 Moody’s / BBB- S&P / BBB- Fitch
Instrument USD Wakala Trust Certificates (“Sukuk”), issued under a USD25 bn Trust Certificate Programme
Format. Status 144A / RegS registered, senior unsecured
Aggregate Size USD3,000 mm
5-year 10-year
Maturity Mar 1, 2023 Mar 1, 2028
Tranche Size USD1,250 mm USD1,750 mm
Profit Rate 3.750% p.a. (30/360) 4.400% p.a. (30/360)
Reoffer Price / Yield 100.000 / 3.750% 100.000 / 4.400%
UST Benchmark (Price / Yield)
2.375% 01/31/23(98-22¾ / 2.655%)
2.750% 02/15/28(98-16+ / 2.923%)
Reoffer Spread +109.5 bp +147.7 bp
Use of Proceeds General financing requirements in line with the Green Bond
and Green Sukuk Framework
General financingrequirements
External Reviewer CICERO second party opinion ㄧ
Other Terms USD200k/1k denominations, English and Indonesia law, Singapore and NASDAQ Dubai listing
First-ever green sukuk offering by any sovereign globally
First USD sovereign green offering, in either sukuk or conventional formats
Transaction Highlights
Set the flattest curve between any 5- and 10-year sukuk offering by the Republic, at 65 bp
Accessed a window of relative stability without any competing supply for aggregate size of USD3 bn, which remains to be the largest sukuk offering by a non-GCC issuer to-date
Maximized green structure and full investment grade ratings to set all-time low spreads to U.S. Treasury for any sukuk offering by the Republic of Indonesia
Over USD7 bn of demand at pricing, featuring sponsorship from investors of the highest quality, green focused funds and sovereign-related entities inclusive
Demand and Allocation Statistics
5-year Green Sukuk 10-year Sukuk
Indications / Book Cover USD3,000 mm / 2.4x USD4,200 mm / 2.4x
Allocations USD1,250 mm USD1,750 mm
Number of Accounts 145 165
Allocations by
Geography
Allocation by Type
Islamic Asia EU US Indonesia
Asset Manager / Fund Manager Bank
Pension Fund / Insurance SWF / Central Bank
Private Bank Green
Non Green
32%
25%15%
18%
10% 24%
12%32%
22%
10%
29%
40%
10%
20%1%
47%
39%
6%7%
1%29%
71%
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Issuer Republic of Indonesia
Series RI0123 RI0128 RI0148
Issuer Rating Baa3 (Moody’s) / BBB- (S&P) / BBB- (Fitch)
Issue Rating Baa3 (Moody’s) / BBB- (S&P) / BBB- (Fitch)
Pricing Date December 4, 2017
Settlement Date December 11, 2017
Maturity January 11, 2023 January 11, 2028 January 11, 2048
Size USD$1.00bn USD$1.25bn USD$1.75bn
Tenor 5yr 10yr 30yr
Coupon (p.a.) 2.950% 3.500% 4.350%
Re-offer Yield 3.000% 3.550% 4.400%
Re-offer Spread 85.6 bps 117.6 bps 163.3 bps
Format SEC-Registered Standalone
Listing Singapore Stock Exchange and Frankfurt Stock Exchange
25%
40%
21%
14%
RI0123
22%
48%
20%
10%
RI0128
12%
65%
22%
1% RI0148
Investor Breakdownby Investor Type
Investor Breakdown by Region
54%26%
10%
2% 8% RI0123
47%32%
19%
0% 2% RI0128
59%
10%
27%
0% 4% RI0148
Europe
USA
Asia (ex-Indonesia)
IndonesiaInsurance /Pension Funds
Asset / Fund Manager
Banks Private Banks
Sovereign Wealth Funds
USD GLOBAL BONDS ISSUANCE
(PREFUNDING)
Some achievements of Indonesia’s International Bonds issuance with SEC-Registered format:1. Lowest re-offer spread for 5yr, 10yr, and 30yr tenors, with the final order book of issuance totaling USD9.93 billion of 715 bookings;2. Lowest yield for 5yr and 30yr tenors;3. New issue concession negative with total transaction USD4 billion, including the largest for the issuance of Government bonds in the Asian region;4. Flattest curve ever between 5yr, 10yr, and 30yr tenors.
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SECONDARY MARKET PERFORMANCE
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LCY 10 Year Government Bonds (as of August 3, 2018)
Latest YieldPrev
Day Change(in bps)
YTD Change (in bps)
CN 3.57 ▼ 1.0 ▼ 45.0
HK 2.27 ▲ 1.2 ▲ 43.1
ID 7.83 ▲ 4.8 ▲ 150.6
JP 0.11 ▼ 1.6 ▲ 6.2
KR 2.58 ▲ 0.3 ▲ 10.8
MY 4.05 ▲ 1.0 ▲ 13.2
PH 6.45 ▼ 3.8 ▲ 75.1
SG 2.48 ▼ 2.2 ▲ 47.3
TH 2.73 ▲ 1.0 ▲ 40.7
US 2.95 ▼ 3.7 ▲ 54.3
VN 5.00 0.0 ▼ 20.4
Source: Market Watch Asian Bond Online
(%)
Average Daily TradingYields of Benchmark Series
Peers 10y Govt Bonds’ Yield
As of August 3, 2018As of August 3, 2018
Foreign Ownership V. 10Y Yield Movement
Source: IBPA
As of August 3, 2018
2
4
6
8
10
12
14
16
18
20
22
Jun'1
1
Sep'1
1
Dec'1
1
Mar'1
2
Jun'1
2
Sep'1
2
Dec'1
2
Mar'1
3
Jun'1
3
Sep'1
3
Dec'1
3
Mar'1
4
Jun'1
4
Sep'1
4
Dec'1
4
Mar'1
5
Jun'1
5
Sep'1
5
Dec'1
5
Mar'1
6
Jun'1
6
Sep'1
6
Dec'1
6
Mar'1
7
Jun'1
7
Sep'1
7
Dec'1
7
Mar'1
8
Jun'1
8
5Y 10Y 15Y 20Y
7.65 (5Y), 7.78 (10Y), 8.14 (15Y), 8.15 (20Y)
10.67 12.19 16.61 15.84 12.95 17.07
0.69 0.92
1.39 1.36
1.03
0.69
17.73
20.80 17.23
14.97 21.22
22.88
-
15.00
30.00
45.00
2016 2017 Mar-18 Jun-18 Jul-18 s.d 3 August-18
OUTRIGHT REPO BANK REPO BI
600
650
700
750
800
850
900
5.00
5.50
6.00
6.50
7.00
7.50
8.00
Apr-17 Jun-17 Aug-17 Oct-17 Dec-17 Feb-18 Apr-18 Jun-18
[%] [Rp Triliun]
Non Residen [RHS] Yield 10 Y [LHS]
(in trillion IDR)
1) Non Resident consists of Private Bank, Fund/Asset Manager, Securities Company, Insurance Company, and Pension Fund.
2) Others such as Securities Company, Corporation, and Foundation.
*) Including the Government Securities used in monetary operation with Bank Indonesia.
**) net, excluding Government Securities used in monetary operation with Banks.
OWNERSHIP OF TRADABLE DOMESTIC
GOVERNMENT SECURITIES
Description Dec-14 Dec-15 Dec-16 Jan-17 Dec-17 3-Aug-18
Banks* 375.55 31.04% 350.07 23.95% 399.46 22.53% 493.82 27.27% 491.61 23.41% 597.38 26.60%
Govt Institutions
(Bank Indonesia**)41.63 3.44% 148.91 10.19% 134.25 7.57% 53.31 2.94% 141.83 6.75% 92.99 4.14%
Bank Indonesia
(gross)157.88 8.90% 163.63 9.03% 179.84 8.56% 204.90 9.12%
GS used for
Monetary Operation 23.63 1.33% 110.32 6.09% 38.01 1.81% 111.91 4.98%
Non-Banks 792.78 65.52% 962.86 65.87% 1,239.57 69.90% 1,264.02 69.79% 1,466.33 69.83% 1,555.69 69.26%
Mutual Funds 45.79 3.78% 61.60 4.21% 85.66 4.83% 87.84 4.85% 104.00 4.95% 113.31 5.04%
Insurance Company
and Pension Fund193.90 16.03% 221.45 15.15% 325.52 18.36% 328.20 18.12% 348.86 16.61% 399.51 17.79%
Foreign Holders 461.35 38.13% 558.52 38.21% 665.81 37.55% 685.51 37.85% 836.15 39.82% 847.14 37.72%
Foreign Govt's &
Central Banks103.42 8.55% 110.32 7.55% 120.84 6.81% 118.91 6.57% 146.88 6.99% 155,80 6.94%
Individual 30.41 2.51% 42.53 2.91% 57.75 3.26% 57.69 3.19% 59.84 2.85% 63.47 2.83%
Others 60.51 5.00% 78.50 5.37% 104.84 5.91% 104.78 5.79% 117.48 5.60% 132.25 5.89%
Total 1,209.96 100% 1,461.85 100% 1,773.28 100% 1,811.14 100% 2,099.77 100% 2,246.06 100%
14
FOREIGN INVESTORS ARE MOSTLY DOMINATED BY HIGH QUALITY LONG TERM INVESTORS
FOREIGN INVESTOR ACTIVITY
Monthly Net Buyer (Seller) - Non Resident Foreign Ownership - Proportion by Tenor
15
[In Trillion IDR ] As of August 3, 2018As of August 3, 2018
5,2% 4,6% 3,2% 3,5% 5,0% 6,3%
5,4% 3,7%1,3%
5,3%5,1% 1,2%
12,9% 15,2%
11,8%
17,8% 17,3% 20,5%
32,0% 33,6%
39,0%
37,4% 35,6% 37,0%
44,5% 42,8% 44,7%
36,0% 37,0% 34,9%
32,5%
38,1% 38,2% 37,5%39,8%
37,7%
0%
20%
40%
60%
80%
100%
Dec 13 Dec 14 Dec-15 Dec-16 Dec-17 3-Aug-18
0-1 ≥1-2 ≥2-5 ≥5-10 ≥10 %Foreign Ownership of Total
SOUND GOVERNMENT DEBT PORTFOLIO MANAGEMENTStable debt to GDP ratio with diversified funding profile
Well Diversified Across Different
Currencies56% 53% 57% 55% 58% 60%
24% 29% 29% 32% 31% 29%14% 12% 9% 8% 7% 6%3% 3% 3% 3% 4% 4%
3% 3% 2% 2% 1% 1%
2012 2013 2014 2015 2016 2017
IDR USD JPY EUR Other
Financing needs mostly fulfilled from
Gov’t Securities Issuance
*Note: using GDP assumption IDR14,092.72 as mentioned in APBN Kita
31,2% 30,0% 25,9% 23,8% 20,9% 18,9% 18,8%
68,8% 70,0% 74,1% 76,2% 79,1% 81,1% 81,2%
23.0% 24.9% 24.7%27.5% 29% 29.6%*
-5,0%
5,0%
15,0%
25,0%
35,0%
0%
20%
40%
60%
80%
100%
2012 2013 2014 2015 2016 2017 2018
Loans (LHS) Securities (LHS) Govt Debt / GDP (%) (RHS)
28.3%
16
SOLID POLICY COORDINATION IN MANAGING FINANCIAL MARKETS VOLATILITY
First Line of Defense
State’s Budget
Buyback fund at DG of Budget Financing
and Risk Management
Investment fund at Public Service Agency
(BLU) (min. level Aware)
State Owned Enterprises
(BUMN)’s Budget Related SOEs (min. level Aware)
Social Security Organizing
Agency (BPJS)’s BudgetBPJS (min. level Aware)
Second Line of Defense
State’s Budget
State General Treasury Account (Rekening
KUN) (min. level Alert)
Accumulated cash surplus (SAL) (min. Level
Crisis)
Gov’t Securities Crisis Management Protocol (CMP)
Indicators:
- Yield of benchmark series;
- Exchange rate;
- Jakarta Composite Index;
- Foreign ownership in government securities
Policies to address the crisis at every level :
- Repurchase the government securities at secondary market
- Postpone or stop the issuance
The enactment of Law No. 9/2016 regarding Prevention
and Mitigation of Financial System Crises as a legal
foundation for the government to serves at the time of
financial crisis in the form of Financial System Stability
Committee (KSSK)
Specific policies in place to address crises enacted in 2018
Budget Law (Law No. 15/2017, article 25):
• Govt (with legislative approval) could utilize AccummulatedCash Surplus (SAL) for stabilizing market
• Legislative approval should be received within 24 hr after Govt proposed
Bond Stabilization Framework
Swap facility arrangements based on international
cooperation
Enhancing coordination between government institutions
and continuous dialogue with market participants
Implementing Crisis Management Protocol (CMP)
Implementing Bond Stabilization Framework (BSF)
CMP
BSF17
Directorate of Government Debt SecuritiesDirectorate General of Budget Financing and Risk Management
Ministry of Finance of The Republic of Indonesia
Frans Seda building, 4th FloorJl. Wahidin Raya No. 1, Jakarta Pusat – Postal Code: 10710
Phone: +6221 3810175Fax. : +6221 3846516
Website: www.djppr.kemenkeu.go.idEmail: [email protected]
END OF PRESENTATION