Government Securities Management

Transcription

1 Directorate of Government Debt Securities Directorate General of Debt Management Ministry of Finance of The Republic of Indonesia Government Securities Management December 8, 2014

2 OUTLINE 1. Government Securities Management and Financing Strategy 2. Government Securities Performance 3. Crisis Management Protocol & Bond Stabilization Framework 4. Debt Outstanding & Risk Profile 2

3 Government Securities Management and Financing Strategy

4 Government Securities Market Development Framework Deep & Liquid Market Sufficient Market Absorption & Efficient Price/Yield MARKET INFRASTRUCTURE Demand Banks Foreigners Insurance Company Mutual Fund Central Bank Pension Funds Securities Company Retail Investor Deposit Insurance Corp. Domestic Potential Investors Primary Market 1. Activities: Regular Issuance (Auction, Book building, Private Placement) 2. Infrastructure: Auction System for domestic and onshore USD issuance Settlement system for retail bonds Secondary Market 1. Activities: Buyback, Debt switch, Securities Lending 2. Infrastructure: Electronic Trading Platform (ETP): for retail and conventional bonds. System Development: Debt Switch Program (Many to Many), Staplebonds, and Hittable of PDs quotation System : Primary Dealers quotation, Exchange Trading Mechanism, OTC Trading system 3. Price Discovery Mechanism: Benchmark Yield Curve, IBPA, Reporting System 4. Repo & Derivative Instruments: GMRA & Government Bond Futures Supply Government Debt Securities SUKUK Regulation and Supervision 4

5 Key Initiatives to Develop Domestic Gov. Securities Market Facilitating the development of derivative instrument and Government securities repo: Develop a deep and liquid repo market, coordinate with FSA Facilitating the development of Government Bond Futures Focused on a few benchmark series with large outstanding Introduction of an electronic trading platform (ETP) Strengthening Investor Relations (IR) Launch a new primary dealer system Increase domestic participation from key investors Continuously improving bond stabilization framework 5

6 Financing Trend, (trillion IDR) * 2015 Govt Securities - net Domestic Loan External Loan - net (28.1) (10.3) (26.6) (26.6) (18.4) (12.4) (4.6) (17.8) (23.5) (5.8) (13.4) (23.8) Others/Non-Debt - net 42.0 (1.2) (12.2) (9.0) Budget Defisit, % to GDP (0.5) Notes: * Revised Budget

7 Securities Financing Realization 2014 *(Million IDR) % Realization to Revised Budget Realization Revised Budget Remaining target* 2014* (ao Dec )* 2014 Government Securities Net 264,983, ,389, % (9,405,640) Government Securities Maturing in ,151, ,739, % 9,411,226 -Buyback 1,350,968 1,350, % - Issuance Need 2014* 428,134, ,129, % 5,586 Government Debt Securities (GDS) 352,588,379 Domestic GDS 284,376,795 -Coupon GDS (Auction, Private Placement) 199,870,000 -Conventional T-Bills (Auction, Private Placement) 48,500,000 -SPNNT ,400,000 -Retail Bonds 23,606,795 International Bonds 68,211,584 -USD Global Bonds 48,466,366 -USD Domestic Bonds 3,985,450 -Euro Denominated Bonds 15,759,767 -Samurai Bonds - Government Islamic Debt Securities 75,540,748 Domestic Government Islamic Debt Securities 57,794,345 - IFR/PBS/T-Bills Sukuk (Islamic Fixed Rated Bond/Project Based Sukuk) 38,471,000 - Retail Sukuk 19,323,345 Global Sukuk 17,746,403 *Adjusted by changes in Cash Management & Debt Switch 7

8 General Strategy for Debt Financing Optimizes Governments securities (SBN) issuance from domestic sources to fulfill Budget need and uses foreign debts as complimentary; 2. Determines debt instrument by taken into account of market need in regard to market development and portfolio management; 3. Issues Retail Bond for instrument diversification and financial inclusion; 4. Optimizes foreign and domestic loan instrument to fulfill Budget need on capital expenditure; 5. Conducts active portfolio management of Government securities through, among others, debt buyback and debt switch, in order to promote market liquidity and stability; 6. Strengthens the function of Investor Relations Unit, among others, through the proactive dissemination of information, rapid and effective responses, and effective communication with investors and other stakeholders. 8

9 Government Budget 2015 Description Budget 2015 In billion IDR % to GDP A. Total Revenue 1,793, % B. Total Expenditure 2,039, % Interest Payment 151, % Domestic 137, % Foreign 14, % C. Primary Balance (93,926.4) -0.8% D. Deficit (245,894.7) -2.2% E. Financing 245, % I. Non Debt (8,961.3) -0.1% II. Debt 254, % 1. Government Securities (Net) 277, % 2. Foreign Loan (Net) (23,815.0) - 0.2% 3. Domestic Loan (Net) 1, % Assumptions : GDP (trillion IDR) (Y.o.Y) 11,146,943.0 Growth (%) 5.8 Inflation (%) y-o-y month-SPN (%) 6.0 IDR/USD (average) 11,

10 Financing 2015 Description Budget In billion IDR 2015 A. Total Revenue 1,793, B. Total Expenditure 2,039, Interest Payment 151, C. Primary Balance (93,926.4) (0.84) D. Deficit (245,894.7) (2.21) E. Financing 245, I. Non Debt (287,039.1) (2.58) II. Debt 532, Government Securities (Net) 277, i. Issuance 430, ii. Principal Refinancing and Buyback (153,936.3) (1.38) 2. Loan (Net) (22,193.9) (0.20) i. Foreign Loan (Net) (23,815.1) (0.21) Disbursement 47, Program Loan 7, Project Loan 39, On Lending (4,319.4) (0.04) Foreign Loan Principal Payment (66,532.8) (0.60) ii. Domestic Loan (Net) 1, Disbursement 2, Domestic Loan Principal Payment (378.8) (0.00) Assumptions : GDP (trillion IDR) (Y.o.Y) 11,146,943.0 Growth (%) 5.8 Inflation (%) y-o-y month-SPN (%) 6.0 IDR/USD (average) 11,900 % to GDP Financing sources come from debt financing (88.75% from Government Securities, 10.10% from Loan) and the rest 1.15% from non debt financing; (* Non Debt Financing Expenditures: Gov t Investment Fund; Contingent Liabilities. (** Non Debt Sources: Inflows from On-Lending Repayment; Inflows from Asset Management

11 Gross Government Securities Financing 2015 in billion IDR Instrumen Indicative Target Govt Securities (net) 277,050 Redemption 135,936 Cash Management 15,000 Buyback 3,000 Govt Securities (gross) 430,986 Domestik 80% Retail 9% Non-Retail 71% International Bond 20% DOMESTIC: Auction: 23 times of conventional securities auction 22 times of islamic securities auction Non-Auction Retail bonds, consist of ORI and Sukuk Retail. INTERNATIONAL BOND Issuance of International Bonds as complement to avoid crowding out in domestic market and provide benchmark for corporate issuance, consist of USD, YEN or EURO global bonds Maximum issuance international bond 20% from target gross Issuing the Government Securities using Front Loading Strategy in the first semester 11 11

12 Government Securities Performance 12

13 Govt. Debt Securities Primary Market 80,000 Incoming Bids Awarded Bids Foreign Incoming Bids Foreign Awarded Bids % Foreign Incoming Bids (RHS) 60% 70,000 Average incoming bids 2013 = Rp18.91T/auction Average incoming bids 2014 = Rp23.37T/auction 50% 60,000 50,000 Average awarded bids 2013 = Rp9.04T/auction Average awarded bids 2014 = Rp11.29T/auction 40% 40,000 Average foreign incoming bid 2013 = Rp7.38T/auction Average foreign incoming bid 2014 = Rp7.85T/auction 30% 30,000 20% 20,000 10% 10,000 - Jan-13 Feb-13 Mar-13 Apr-13 May-13 Jun-13 Jul-13 Aug-13 Sep-13 Oct-13 Nov-13 Dec-13 Jan-14 Feb-14 Mar-14 Apr-14 May-14 Jun-14 Jul-14 Aug-14 Sept-14 Okt-14 4 Nov 0% Average Foreign incoming bids 2014 is Rp7.85T, slightly higher than the same period in 2013, which reached 7.38T Average incoming bids 2014 = Rp23.37T, increased from average incoming bids 2013 = Rp18.92T Average awarded bid 2014 = Rp11.29 T, while average awarded bid 2013 = Rp9.04T. 13

14 Million IDR Incoming & Awarded Bids per Tenor Domestic Govt Bonds in ,000, ,000, ,000, ,000, ,000,000 40,000, ,000, month 9 month 1 year 5 year 10 year 15 year 20 year 30 year Bid Offered 45,275,500 21,373,000 81,402,000 62,063, ,870,600 87,677,700 80,807,100 14,736,200 Bid Awarded 10,550,000 8,350,000 29,600,000 36,700,000 61,170,000 46,700,000 47,800,000 7,500,000 Bid to Cover ratio

15 Secondary Market Performance [In Percentage] Apr'08 Jul'08 Oct'08 Jan'09 Apr'09 Yields of Benchmark Series steadily decrease Global Financial Crisis Jul'09 Oct'09 Jan'10 Apr'10 Jul'10 Oct'10 5Y 10Y 15Y 20Y 7.63(5Y), 7.80 (10Y), 8.03(15Y), 8.19(20Y) Jan'11 Apr'11 Jul'11 Eurozone sovereign debt crisis Oct'11 Jan'12 Apr'12 Jul'12 Oct'12 Jan'13 Apr'13 As of Dec 5, 2014 Jul'13 Oct'13 Jan'14 Apr'14 Jul'14 Oct'14 Average daily trading (IDR Trilion) Activities of the domestic bonds are growing As of Dec 5, OUTRIGHT BANKS REPO REPO BI (Indonesia's Central Bank) Bid Ask Spread 10 Y Government Bond Turn Over 10 Y Government Bond Jan-09 May-09 Sep-09 Jan-10 May-10 Sep-10 Jan-11 May-11 Sep-11 Jan-12 May-12 Sep-12 Jan-13 As of Des 5, 2014 Spread 8.2 bps (ask %, bid 7.857%) May-13 Sep-13 Jan-14 May-14 Sep Turn Over Govt Bond 10 Y (a.o. Oct) 15

16 Yield GS on peer s market (a.o. Dec 5, 2014) [in percentage] LCY 10 Year Government Bonds Latest Yield YTD Change (BP) MTD Change (BP) HK ID JP KR MY PH SG TH US VN Market Watch as of Dec 5, 2014 Source: Asian Bonds Online Tenor 5-Dec Nov-14 5-Nov-14 9-Feb Sep Oct Sep'05 1Y Y Y Y Y Y Y Y Y Y Y Dec '14 28 Nov '14 5 Nov '14 9 Feb '12 23 Sep '11 27 Oct '08 13 Sep'05 1Y 2Y 3Y 4Y 5Y 6Y 7Y 8Y 9Y 10Y 15Y 20Y 30Y 16

17 Ownership of Tradable Domestic Government Securities (In IDR Trillion) ` Dec-12 Dec-13 Mar-14 Jun-14 Sep-14 Nov Dec-14 Banks % % % % % % % Govt Institutions (Bank Indonesia*) % % % % % % % Non-Banks % % % % % % % Mutual Funds % % % % % % % Insurance Company % % % % % % % Foreign Holders % % % % % % % Foreign Govt's&Central Banks** % % % % % % % Pension Fund % % % % % % % Securities Company % % % % % % % Individual % % % % % % Others % % % % % % % Total % % 1, % 1, % 1, % 1, % 1, % 1) Including ownership of SBSN (government sukuk). 2) Foreign are consisted of Private Banking, Fund/Asset Management, Securities, Insurance, Pension Fund. 3) Others are consisted of Corporation, Individual, Foundation. *) Since February 8th, 2008, repo transaction of Government Securities to Bank Indonesia was included. **) Since November 21, 2014, foreign government(s) was included to the same category as foreign central bank(s). In 2014, foreign investor ownership record the highest percentage, showing their increasing appetite on the Indonesia s government securities. 17

18 Domestic Institutional Investors Pension Fund Insurance Company % 27.43% Rp90.11 Rp Rp Rp Rp % 22.64% 19.68% Rp Rp Rp % 19.46% 18.33% 30.00% 20.00% % Rp % Rp % Rp % Rp Rp % Rp % Rp % Rp % 30.00% 20.00% % % Mar-14 Jun-14 Govt. Securities (GS) Bond Deposit Stock Mutual Funds Others 0.00% Mar-14 Jun-14 Govt. Securities (GS) Bond Deposit Stock Mutual Funds Others 0.00% Mutual Fund % % 50% % % % % 20% 40% 30% 20% 10% 0 0% Source: Financial Service Authority (OJK), data processsed Government Securities (GS) Deposit Bond Stock Others % SBN (RHS) 18

19 Retail Investors Individual Ownership Retail Govt Securities investors in primary market 4.50% 4.00% 3.50% 3.00% 2.50% 2.00% 1.50% 1.00% 0.50% 0.00% 4.20% Nominal (IDR Trillion) RHS Percent 3.09% 2.82% 2.51%2.27% 3.24% 3.28% 3.12% 2.78% 2.69% 2.58% 2.41% 3.86% 2.61% 2.56% ,000 35,000 30,000 25,000 20,000 15,000 10,000 5,000-16,561 27,019 37,072 14,601 14,295 20,418 17,231 15,487 17,606 17,783 16,107 10,959 10,410 26,824 34, a.o. Oct 30, ,412 ORI SR SBR 19

20 Aug-11 Sep-11 Oct-11 Nov-11 Dec-11 Jan-12 Feb-12 Mar-12 Apr-12 May-12 Jun-12 Jul-12 Aug-12 Sep-12 Oct-12 Nov-12 Dec-12 Jan-13 Feb-13 Mar-13 Apr-13 May-13 Jun-13 Jul-13 Aug-13 Sep-13 Oct-13 Nov-13 Dec-13 Jan-14 Feb-14 Mar-14 Apr-14 May-14 Jun-14 Jul-14 Aug-14 Sep-14 Oct-14 Nov-14 Dec 5-14 Foreign Investor Activity 2014 Foreign Ownership - Proportion by Tenor Net Buyer (Seller) - Non Resident 100% 80% 60% 40% 40.00% 39.05% 46% 38% 45% 44% 41% 40% 41% 41% 42% 43% 42% 43% 42% 42% 33.64% 34.59% 35.72% 35.66% 36.33% 36.81% 37.30% 39.41% 37.80% 32.98% 32.54% 30.53% 30.80% 21% 25% 28% 32% 38% 34% 33% 33% 33% 34% 34% 34% 33% 34% 20.00% [In IDR Trillion] (10.00) (1.49) 1.69 (4.99) 8.06 Capital Inflows (8.99) (0.08) (2.27) (1.41) (4.37) Capital inflows over total foreign holders (0.88) (1.76) (0.37) (4.97) (0.05) 20% 0% 18% 17% 16% 8% 13% 11% 15% 15% 15% 16% 15% 15% 15% 16% 15% 5% 3% 10% 12% 5% 5% 4% 5% 3% 3% 3% 4% 4% 4% 4% 8% 5% 6% 7% 7% 7% 6% 6% 5% 5% 5% 5% Dec-10 Dec-11 Dec-12 Dec-13 Mar-14 Apr-14 May-14 June 14 July 14 Aug 14 Sep-14 Oct-14 Nov Dec % (20.00) (30.00) (40.00) (29.29) (19.98) (0.10) (0.15) >10 >5-10 >2-5 > % Foreign Ownership to Total (RHS) Foreign investors mostly dominated by high quality long term investors 20

21 Crisis Management Protocol & Bond Stabilization Framework 21

22 Comprehensive Stabilization Framework to Pro-actively Manage Pressures on Financial Sector Implementing Crisis Management Protocol Implementing Bond Stabilization Framework Enhancing coordination between government institutions and continuous dialogue with market participants Crisis Management Protocol The FKSSK, Consists of Minister of Finance, BI Governor, Head of Indonesian FSA and Head of Indonesian Deposit Insurance Corporation, manages the Nationwide Crisis Management Protocol (CMP) Framework as guidance and procedures for national crisis prevention and mitigation measures. The nationwide CMP incorporates the Exchange Rate, Banking, Non-Bank Financial Institution, Capital Market, Government Bonds Market (SBN), and Fiscal CMPs. Coordination Meeting is conducted regularly to discuss and assess the current level of Financial System Stability and current issues related to the financial system FKSSK has conducted two crisis simulations: Full Dress Simulation (ministerial level) and activation of pre-emptive instrument (CMIM) at technical level Fiscal Buffers to Prevent and Mitigate Crisis 1 Swap facility arrangements based on international cooperation & Deferred drawdown option facilities Bond Stabilization Framework DMO Budget SOE Budget BPJS Budget* Buyback Funds Related SOEs (min. Alert level) BPJS Workforce and BPJS Healthcare funds Buyback of government bonds by the DMO from the state budget Potential purchase of government bonds by State Owned Enterprises Potential purchase of government bonds by BPJS Workforce and BPJS Healthcare 2 Specific articles in the State Budget Law that provide flexibility for Government to take quick mitigation action if necessary, with Parliament approval that has to be given within 24 hours Other Gov t Budget KUN (State s General Cash) (min. Alert level) PIP Investment Funds (min. Alert Level) SAL (min. Crisis Level) Potential purchase of government bonds by the Treasury Office using the State s General Cash (KUN) Potential purchase of government bonds by the Indonesia Investment Agency Purchase of government bonds using the accumulated cash surplus (SAL). Parliament approval is required *Based on MoU between MoF and BPJS (Social Security Agency) Workforce & BPJS Healthcare that has been signed on Sept 1,

23 Debt Outstanding & Risk Profile 23

24 Maturity Profile Central Gov t Debt as of End of Nov 2014 Maturity Profile of Central Government Debt by Instruments (in trillion Rp) Gov't Sec Loan % 25.9% Loan Gov't Sec Maturity Profile of Central Debt Government by Currency (in trillion Rp) Foreign Denominated Domestic Denominated % 42.9% Foreign Denominated Domestic Denominated 24

25 Outstanding Central Gov t Debt by Instrument Nominal % a. Foreign Loan (in billion USD) % Bilateral % Multilateral % Commercial % Suppliers % b Domestic Loan (in billion USD) % c. Government Securities (in billion USD) % Foreign Currency Denominated % Rupiah Denominated % Total Central Government Debt (in billion USD) Total Central Government Debt (in trilion IDR) Description , , , , , ,601.2 Exchange Rate Assumption (IDR/USD1) 9, , , , , ,082.0 GDP (in trillion IDR) 5, , , , ,084.0 Debt to GDP Ratio 28.3% 26.2% 24.4% 24.0% 26.1% 2010 Oct'14 25

26 Outstanding Central Gov t Debt by Currency Original Currency IDR (in trillion) , , ,484.8 Gov't Securities , , ,482.2 Loan USD (in billion) Gov't Securities Loan JPY (in billion) 2, , , , , ,262.9 Gov't Securities Loan 2, , , , , ,107.9 EUR (in billion) Other currencies Equivalent in Billion USD IDR % USD % JPY % EUR % Other currencies % Total Eq. in Billion USD Equivalent in Trillion IDR IDR , , ,484.8 USD JPY EUR Other currencies Total Eq. in Trillion IDR 1, , , , , ,601.2 Foreign Currency Portion 47.4% 46.3% 45.1% 44.5% 46.7% 42.9% Exchange Rate Assumption USD/IDR 9,400 8,991 9,068 9,670 12, , Oct Multiple Currencies

27 Reduction in Central Government Debt Portfolio Risk Risk indicator in good condition, even there is pressure from rupiah depreciation Interest Rate Risk Steadily Declining Interest Rate Risk Exchange Rate Risk on Downward Trend Exchange Rate Risk Risk indicator shows that there are improvements in interest rate, risk and stability in exchange and refinancing risk Q Variable rate ratio [%] Refixing rate [%] Long Average Years to Maturity Q FX Debt to GDP ratio (%) FX Debt to total debt ratio (%) Debt Maturity Evenly Spread Average Time To Maturity (ATM)-Years Debt Maturing in 1, 3 and 5 Years Q Q Maturity debt portion < 1 year (%) Maturity debt portion < 3 year (%) Average Time to Maturity (in percentage) Maturity debt portion < 5 year (%) 27

28 END OF PRESENTATION Directorate General of Debt Management Ministry of Finance of Republic of Indonesia Directorate of Government Debt Securities Frans Seda building, 4 th floor, Jl. Wahidin Raya No. 1, Jakarta Pusat Postal Code: Phone: Fax. : Site: 28