Fixed Income Daily One Pager Series — Daily Bond Lantern
Indonesian government bonds weakened across most of the curve, with the 5Y yield (FR104) rising 3.2bps to 7.25% and the 10Y yield (FR0108) climbing 3.6bps to 7.30%, resulting in a modest steepening of the 5Y–10Y curve by 0.4bps. The INDOBeX Composite slipped 0.06% to 429.872. Global sentiment remained under pressure after Iran-backed Houthi forces launched missile and drone attacks on two Saudi oil tankers in the Red Sea, opening a new front in the US-Iran conflict and raising concerns over potential disruptions to the Bab el-Mandeb Strait and the Strait of Hormuz. At the same time, stronger-than-expected US labor market data reinforced higher-for-longer Federal Reserve expectations, with initial jobless claims falling by 22,000 to 187,000, the lowest level in nearly 60 years, while continuing claims eased to 1.796 million. Domestically, Danantara is preparing to issue 20-year and 30-year US dollar bonds following its successful debut issuance, although governance concerns and Indonesia’s negative sovereign outlook remain key considerations for investors. Separately, Bank Indonesia kept its policy rate unchanged at 5.75%, while broad money supply (M2) grew 8.7% YoY to IDR10,432.8 trillion in June, moderating from 10.8% YoY in May and indicating supportive domestic liquidity conditions. On the credit front, PEFINDO assigned an idAAA rating with a Stable Outlook to PT Bank Danamon Indonesia Tbk, supported by the strong likelihood of shareholder support from MUFG Bank, while Fitch assigned AAA(idn) ratings to PT Bank UOB Indonesia’s proposed senior bond programme and AA(idn) ratings to its subordinated bond programme.