Fixed Income Daily One Pager Series — Daily Bond Lantern
Indonesian bonds extended their recovery, with the 5Y yield (FR104) declining 8.9bps to 6.64% and the 10Y yield (FR0108) easing 6.2bps to 6.63%, resulting in a mild steepening of the 5Y–10Y curve by 2.7bps, while the INDOBeX Composite rose 0.13%. Market sentiment improved after the US and Iran signaled progress toward extending the ceasefire and reopening the Strait of Hormuz, although several key issues remain unresolved, including Iran’s uranium stockpile, sanctions relief, and shipping access through the strait, with both sides acknowledging that further negotiations are still needed before reaching a final agreement. Domestically, attention turned to Indonesia’s fiscal framework after parliament confirmed discussions will begin on a State Finance omnibus bill following the establishment of Danantara, including the transfer of SOE shareholder authority from the Finance Ministry to the sovereign wealth fund. Importantly, lawmakers emphasized that there have been no discussions regarding changes to Indonesia’s 3% fiscal deficit cap, helping ease concerns over potential loosening of fiscal discipline. Meanwhile, the government announced plans to auction nine series of rupiah-denominated SUN bonds on May 26 with an indicative target of IDR36tn, covering maturities from 2026 to 2064. On the credit side, Medco Power Indonesia (MEDP) has fully repaid its IDR10.3bn sukuk maturing in May 2026, leading to the withdrawal of the rating, while PEFINDO assigned BRI Insurance (BSAM/BRINS) an AA+ financial strength rating with stable outlook, supported by strong backing from Bank Rakyat Indonesia and the company’s solid capitalization and liquidity profile.