Fixed Income Daily One Pager Series — Daily Bond Lantern
Indonesian bonds experienced another sharp selloff, with the 5Y yield (FR104) rising 18.0bps to 7.35% and the 10Y yield (FR0108) jumping 27.2bps to 7.44%, resulting in a steepening of the 5Y–10Y curve by 9.2bps, while the INDOBeX Composite fell 1.58%. Market sentiment remained under pressure as US Treasury yields continued to climb on expectations of a higher-for-longer policy stance, supported by stronger-than-expected labor market data and growing expectations of at least one additional Fed rate hike. Domestically, Bank Indonesia surprised markets with an off-cycle 25bps rate hike, raising the BI Rate to 5.50% in an effort to stabilize the rupiah and restore investor confidence amid heightened volatility and persistent capital outflows. Meanwhile, the government’s SUN auction raised IDR26.35tn from total bids of IDR46.7tn, below the IDR36tn indicative target, although demand remained relatively healthy with a bid-to-cover ratio of 1.77x and particularly strong interest in the benchmark FR0108 series. On the credit side, PEFINDO assigned Pertamina International Shipping (PIS) a AAA rating with a Stable Outlook, supported by its strategic importance within the Pertamina group and strong financial profile, while ADHI’s idA- rating was affirmed with a Negative Outlook, reflecting ongoing leverage pressures and uncertainty surrounding receivable collections despite compliance with bond covenants.