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GOVERNMENT SECURITIES
MANAGEMENTMAY 29, 2019
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
Directorate of Government Debt Securities| Directorate General of Budget Financing and Risk Management| Ministry of Finance of The Republic of Indonesia
3
2019 FINANCING NEEDFulfilled from Government Securities IDR771.7 tn (92.5%) and Loan IDR62.24 tn (7.5%)
Financing need
IDR833.94 T
Budget Deficit
IDR296.0 T
Non-Debt Financing (nett)
IDR63.25 T
Investment Finaning
IDR75.9 T
Lending
IDR2.35 T
Other Financing
(IDR15.0 T)
Matured Debt
IDR474.68 T
GS
IDR382.74 T
80.63%
Loan
IDR91.94 T
19.37%
Financing Sources
IDR833.94 T
Domestic Debt
IDR653.66 T (78.38%)
Domestic GS
IDR651.70 T (78.15%)
Domestic Loan
IDR1.96 T (0.24%)
Foreign Denominated Debt
IDR180.28 T (21.62%)
Foreign Denominated
Bonds
IDR120.0 T (14.39%)
Foreign Loan
IDR60.28 T (7.23%)
2019 Matured T-Bills Issuance
IDR54.0 T
Gross GS
IDR825.70 T
GDS
70 – 75%
Sukuk
25 – 30%
Projection
2018 2019
29.78% 30.00%
(Through auction & non-auction)
Debt to GDP Ratio
Realization
Directorate of Government Debt Securities| Directorate General of Budget Financing and Risk Management| Ministry of Finance of The Republic of Indonesia
GOVERNMENT SECURITIES INDICATIVE FINANCING PLAN FOR 2019
4
GS Net
[388.96]
GS Matured
[382.74]
GS Cash Management
[54.00]
GS Issuance Need
[825.70]
Issuance Composition
Domestic
[83% - 86%]
Auction
[74% – 76%]
Non-auction
[9% - 10%]
International
[14% - 17%]
• Auction:• Conventional Securities – 24x• Islamic Securities – 24x
• Non-auction:• Retail GDS (tradable/ORI & non-tradable), Retail
Sovereign Sukuk (tradable/Sukri & non-tradable);• Private Placement – based on request.
• Foreign denominated GS as complementary Avoidcrowding out in domestic market.
• The target amount can be adjusted to the potential ofother financing sources and financing needs.
GS Rupiah
ForeignDenominated GS
IDR trillion
• The issuance target for Semester I -2019 = 50% -60% of the gross target of GS;
• Especially for financing in IDR, issuance in Semester I = 52% of the IDR GS gross target.
Directorate of Government Debt Securities| Directorate General of Budget Financing and Risk Management| Ministry of Finance of The Republic of Indonesia
43.4065%
0.000%
23.1935%
USD EURO JPY
195.4578%
45.2418%
4.302%
6.262%
Coupon GDS T-Bills
Private Placement Retail Bonds
251.2679%
66.5921%
IDR
FX
127.7781%
29.5219%
IDR
USD
GOVERNMENT SECURITIES FINANCING REALIZATION (a.o. May 29, 2019 - in Trillion IDR)
5
2019
Target Real. %
Government Securities Net 388.96 187.53 48.21%
Issuance Need 825.70 475.13 57.54%
GDS (conventional) 317.84
Sukuk 157.28
87.2568%
13.6411%
26.8821%
Auctions Private Placement Retail Sukuk
GOVERNMENT SECURITIES PERFORMANCE
Directorate of Government Debt SecuritiesDirectorate General of Budget Financing and Risk Management| Ministry of Finance of The Republic of Indonesia
Directorate of Government Debt Securities| Directorate General of Budget Financing and Risk Management| Ministry of Finance of The Republic of Indonesia
GDS PRIMARY MARKET PERFORMANCETHROUGH ACTION
7
Average incoming bid in 2019 = IDR51.86 tn/auction while average awarded bid in 2019 = IDR21.88 tn/auction
[IDR Trillion]
Average
Incoming
Bid 2018 =
IDR42.38T/
auction
Average
Awarded
Bid 2018 =
IDR18.14T/
auction
Directorate of Government Debt Securities| Directorate General of Budget Financing and Risk Management| Ministry of Finance of The Republic of Indonesia
GS PRIMARY MARKET PERFORMANCE 2018-2019THROUGH ACTION
8
[IDR Trillion]
Average incoming bid in 2019 = IDR36.03 tn/auction while average awarded bid in 2019 = IDR14.66 tn/auction
Average
Incoming
Bid 2018 =
IDR27.87T/
auction
Average
Awarded
Bid 2018 =
IDR12.15T/
auction
Directorate of Government Debt Securities| Directorate General of Budget Financing and Risk Management| Ministry of Finance of The Republic of Indonesia
USD GLOBAL BONDS ISSUANCE
(PREFUNDING 2019)
Issuer Republic of Indonesia
Issuer Rating Baa2 Moody’s (Stable)BBB- S&P (Stable)BBB Fitch (Stable)
Exp. Issue Rating Baa2 Moody’s / BBB- S&P / BBB Fitch
Format U.S. SEC registered
Issue Senior unsecured fixed rate notes
Aggregate Size USD3,000 mm
Long 5-year Long 10-year Long 30-year
Maturity Feb 11, 2024 Feb 11, 2029 Feb 11, 2049
Tranche Size USD750 mm USD1,250 mm USD1,000 mm
Coupon 4.450% p.a.(30/360)
4.750% p.a.(30/360)
5.350% p.a.(30/360)
Reoffer Price 99.852 99.748 99.539
Reoffer Yield 4.480 % p.a. 4.780 % p.a. 5.380% p.a.
UST Benchmark (Yield)
2.875% 11/30/23(2.821%)
3.125% 11/15/28(2.972%)
3.000% 08/15/48(3.259%)
Spread +165.9 bp +180.8 bp +212.1 bp
Denominations USD200k/1k
Listing Singapore, Frankfurt Open Market
Law New York
Use of Proceeds For general purposes of the Republic of Indonesia, including to partially fund general financing requirements
Transaction Highlights:1. Navigated substantial volatility to successfully pre-fund 2019 budgetary requirements, capitalizing on what would be the only constructive market into which to execute its
transaction during the weeks available to Indonesia for a transaction prior to year-end.2. Successfully reset the Republic’s curve at the flattest level ever across 5Y, 10Y, and 30Y tenors, with less than 100 bp difference between 5Y and 30Y maturities3. High quality orderbook of over USD8.2 bn at pricing featuring notable sponsorship from high quality accounts and diversification into new pools of demand in the U.S.
Investor Breakdownby Investor Type
Investor Breakdown by Region
9%
29%
16%
55%
Asia Europe U.S. Indonesia
10%
34%
23%
43%
4%
38%
18%
44%
68%
7%
4%
19%
1%1%
75%
6%
7%
11%0% 1%
70%
4%
13%
10%≤1% 2%
Asset Manager / Fund Manager Bank Pension Fund / Insurance Sovereign Wealth Fund / Central Bank Private Bank Other
RI0124
RI0129
RI0149
RI0124
RI0129
RI0149
9
Directorate of Government Debt Securities| Directorate General of Budget Financing and Risk Management| Ministry of Finance of The Republic of Indonesia 10
Breakdown of Distribution by GeographyPricing Date: 12 February, 2019
Issuer: Perusahaan Penerbit SBSN Indonesia III
Obligor: The Government of Republic of Indonesia
Issuer Ratings: Baa2 (Moody’s) / BBB- (S&P) / BBB (Fitch)
Format and Instrument: 144A / Reg S Wakala Sukuk
Tenor: 5.5-years 10-years
Maturity Date: 20 August, 2024 20 February, 2029
Tranche Size: USD750mn USD1.25bn
Benchmark Yield: 2.493% 2.686%
Re-Offer Spread: CT5+140.7 bps CT10+176.4 bps
Profit Rate: 3.900% 4.450%
Periodic Distribution Rate: 3.900% 4.450%
Listing: NASDAQ Dubai, SGX-ST
Law: English / Indonesian Law
Joint Bookrunners: DB, DIB, HSBC, Mandiri, Maybank
Key Transaction Details
The Republic of Indonesia (“ROI”) successfully returned to the
US Dollar Sukuk market for the eighth time
Prior to the launch of the offering, ROI chose to reducepotential
time-to-market amidst the Chinese New Year Holiday first by
engaging the Middle Eastern and European investors first while
Asia was out
At the back-end of the roadshow, the Republic took advantage of
a conducive market backdrop to launch itsoffering
The transaction was announced with IPTs of 4.20% area and
4.70% area on the 5.5-year and 10-year tranches respectively
With a headline orderbook of >USD7.5bn, ROI was able to revise
guidance to 3.90 – 3.95% (WPIR) on the 5.5-year and 4.45 –
4.50% (WPIR) on the 10-year
The Republic eventually priced USD750mn 5.5-year Green Sukuk
and USD1.25bn 10-year Sukuk at tight end of final guidance
Transaction Highlights
5.5-year 10-year
Breakdown of Distribution by Investor Type
5.5-year 10-year
FM/AM
31%
Banks
23%
Ins/PF
17%
CBs/Official Institutions
21%
Others
8%
FM/AM
49%
Banks
32%
CBs/Official Institutions
3%
Ins/PF
7%
Others
9%
Indonesia
8%
ME/Islamic
30%Other Asia
15%
Europe
26%
US
21%
Indonesia
10%
ME/Islamic
29%
Other Asia
16%
Europe
22%
US
23%
REPUBLIC OF INDONESIA (Baa2 / BBB- / BBB)USD750mm 5.5-year Green Sukuk and USD1.25bn 10-year Sukuk
Directorate of Government Debt Securities| Directorate General of Budget Financing and Risk Management| Ministry of Finance of The Republic of Indonesia
Issuer Republic of Indonesia
Issuer Ratings Baa2(Moody’s)/BBB-(S&P)/BBB(Fitch)/BBB(R&I)/BBB(JCR)
Format Samurai Bonds
Type of Notes Senior Unsecured
Bond Ratings Baa2(Moody’s)/ BBB-(S&P)/ BBB(Fitch)
Pricing Date May 16, 2019
Settlement Date May 22, 2019
Total Issue
AmountJPY 177.0bn
Tenor 3yr FIX 5yr FIX 7yr FIX 10yr FIX 15yr FIX 20yr FIX
Tranche Size JPY 75.7bn JPY 80.2bn JPY 4.5bn JPY 7.6bn JPY 4.0bn JPY 5.0bn
Coupon 0.54% 0.83% 0.96% 1.17% 1.55% 1.79%
Re–offer Spread YSO+52bp YSO+80bp YSO+88bp YSO+95bp YSO+120bp YSO+130bp
Key Notes
1. RoI’s demonstrated commitment to issue bonds in the Samurai market on an annual basis, the investors are impressed by the country’s consistent and multi-faceted progression,including holding the world’s largest democratic election.
2. RoI printed JPY177 billion size which marks this transaction as the largest ever Samurai bonds transaction by Asian Issuer.
3. RoI managed to issue 2 new tenors i.e. 15-year and 20-year bonds. These are the longest tenor bond outstanding by an Asian Issuer.
JPY177bn 6-tranche Samurai Bonds
Breakdown of Distribution by Investor Type
10-year
11
Directorate of Government Debt Securities| Directorate General of Budget Financing and Risk Management| Ministry of Finance of The Republic of Indonesia
(%)
Average Daily TradingYields of Benchmark Series
Peers 10y Govt Bonds’ Yield
12
As of May 29, 2019
Foreign Ownership V. 10Y Yield Movement
LCY 10 Year Government Bonds (as of May 15, 2019)
Latest Yield
(%)
Prev Day Change
(in bps)
YTD Change (in
bps)
CN 3.25 0.0 ▼ 5.6
HK 1.59 0.0 ▼ 41.3
ID 7.96 0.0 ▼ 6.3
JP -0.12 0.0 ▼ 12.3
KR 1.66 ▲ 0.5 ▼ 30.1
MY 3.70 ▼1.3 ▼ 37.8
PH 5.22 ▼ 5.0 ▼ 184.8
SG 2.03 ▼ 0.5 ▼ 0.6
TH 2.23 ▲ 1.8 ▼ 25.1
Source: IBPA
SECONDARY MARKET PERFORMANCE
Source: Market Watch Asian Bond Online
As of May 29, 2019
10.67 12.19 14.49 16.74
19.79
20.81 16.88 15.41
0.69 0.92
1.31
3.53 1.48
2.78
2.60 4.38
17.73
20.80
21.59
25.95
17.46 17.82
26.81
21.29
-
20.00
40.00
60.00
2016 2017 2018 Jan-19 Feb-19 Mar-19 Apr-19 s.d 29 Mei-19
OUTRIGHT REPO NON BI REPO BI
As of June 7, 2019
Directorate of Government Debt Securities| Directorate General of Budget Financing and Risk Management| Ministry of Finance of The Republic of Indonesia
(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
13
Description Dec-14 Dec-15 Dec-16 Dec-17 Dec-18 29 May 19
Banks* 375.55 31.04% 350.07 23.95% 399.46 22.53% 491.61 23.41% 481.33 20.32% 492.35 19.68%
Govt Institutions
(Bank Indonesia**)41.63 3.44% 148.91 10.19% 134.25 7.57% 141.83 6.75% 253.47 10.70% 260.52 10.42%
Bank Indonesia (gross) 157.88 8.90% 179.84 8.56% 217.36 9.18% 232.70 9.30%
GS used for Monetary
Operation 23.63 1.33% 38.01 1.81% (36.11) -1.52% -27.82 -1.11%
Non-Banks 792.78 65.52% 962.86 65.87% 1,239.57 69.90% 1,466.33 69.83% 1,633.65 68.98% 1,748.40 69.90%
Mutual Funds 45.79 3.78% 61.60 4.21% 85.66 4.83% 104.00 4.95% 118.63 5.01% 106.95 4.28%
Insurance Company
and Pension Fund193.90 16.03% 221.45 15.15% 325.52 18.36% 348.86 16.61% 414.47 17.50% 448.70 17.94%
Foreign Holders 461.35 38.13% 558.52 38.21% 665.81 37.55% 836.15 39.82% 893.25 37.71% 949.26 37.95%
Foreign Govt's &
Central Banks103.42 8.55% 110.32 7.55% 120.84 6.81% 146.88 6.99% 163.76 6.91% 160,01 6.40%
Individual 30.41 2.51% 42.53 2.91% 57.75 3.26% 59.84 2.85% 73.07 3.09% 84.08 3.36%
Others 60.51 5.00% 78.50 5.37% 104.84 5.91% 117.48 5.60% 134.22 5.67% 159.42 6.37%
Total 1,209.96 100% 1,461.85 100% 1,773.28 100% 2,099.77 100% 2,368.45 100% 2,501.28 100%
Directorate of Government Debt Securities| Directorate General of Budget Financing and Risk Management| Ministry of Finance of The Republic of Indonesia
Monthly Net Buyer (Seller) - Non Resident Foreign Ownership - Proportion by Tenor
[In Trillion IDR ]
FOREIGN INVESTORS MOSTLY DOMINATED BY HIGH QUALITY LONG TERM INVESTORS
14
As of May 29, 2019
FOREIGN INVESTOR ACTIVITY
Directorate of Government Debt Securities| Directorate General of Budget Financing and Risk Management| Ministry of Finance of The Republic of Indonesia
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 2018Budget Law (Law No. 15/2017, article 25):
• Govt (with legislative approval) could utilize Accummulated Cash 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
BSF15
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