GOVERNMENT SECURITIES MANAGEMENT

Transcription

1 GOVERNMENT SECURITIES MANAGEMENT OCTOBER 31, 2018 DIRECTORATE OF GOVERNMENT DEBT SECURITIES DIRECTORATE GENERAL OF BUDGET FINANCING AND RISK MANAGEMENT MINISTRY OF FINANCE OF THE REPUBLIC OF INDONESIA

2 DEBT FINANCING STRATEGY Directorate of Government Debt Securities Directorate General of Budget Financing and Risk Management Ministry of Finance of The Republic of Indonesia

3 2018 FINANCING NEED Fulfilled from Government Securities IDR707.1 tn (88%) and Loan IDR92.5 tn (12%) Matured Debt IDR400.5 tn Budget Deficit IDR325.9 tn Other Financing (IDR0.2 tn) Loan IDR6.7 tn Investment Financing IDR65.7 tn Guarantee IDR1.1 tn Financing Need IDR799.7 tn Domestic Debt IDR572.4 tn (72%) Foreign Denominated Debt IDR227.3 tn (28%) Domestic GS IDR567.9 tn Domestic Loan IDR4.5 tn Foreign Denominated Bonds (JPY, EUR, USD) IDR139.3 tn Foreign Loan (Program & Project) IDR88.0 tn GS (SBN) Gross IDR567.9 tn (Domestic) IDR139.3 tn (Foreign) IDR91.8 tn (SPN/S CM) IDR799.0tn Loan Gross IDR4.5tn (Domestic) IDR88.0tn (Foreign) IDR92.5tn 3

4 GOVERNMENT SECURITIES INDICATIVE FINANCING PLAN FOR 2018 Government Securities to Meet State Budget Financing Instruments 25% - 30% Indicative Budget Target* IDR Tn USD Bn Budget Deficit (2.19%) Government Securities (Net) Government Securities (Gross) Composition Domestic Government Securities 80-83% International Government Securities 17-20% Issuance Targets for Government Securities Domestic Government Securities Weekly auction: Conventional securities Islamic securities Non-Auction 25x 24x Retail bonds (ORI, Retail Sukuk, Online Retail Bonds) Private Placement Based on request Target avg. tenor maturity for Government Securities Issuance 7-9 years International Government Securities 70% - 75% USD Sukuk USD EUR JPY Avoid crowding out in domestic market Provide benchmarks for corporate bonds Investor base diversification Government Debt Securities Government Sukuk 4

5 2018 GOVERNMENT SECURITIES FINANCING REALIZATION Budget 2018 Budget Realization (as of October 30, 2018) Global Sukuk *Global Bonds issuance (prefunding) using SEC format amounted USD4 bn and USD1 bn ** EURO issuance using SEC format amounted EUR1 bn *** Samurai Bonds issuance amounted JPY100 bn (In Million IDR) % Realization to Budget 2018 Government Securities Net ,97% Issuance Need for ,47% Government Debt Securities (GDS) IDR Denominated GDS Coupon GDS Conventional T-Bills Private Placement Retail Bonds Foreign Denominated Bonds SEC USD* SEC Euro** Samurai Bonds*** USD Onshore Bonds - Sovereign Sharia Securities (Sukuk) Domestic Sovereign Sharia Securities IFR/PBS/T-Bills Sukuk (Islamic Fixed Rated Bond/Project Based Sukuk) Retail Sukuk Private Placement

6 GOVERNMENT SECURITIES PERFORMANCE Directorate of Government Debt Securities Directorate General of Budget Financing and Risk Management Ministry of Finance of The Republic of Indonesia

7 GDS* PRIMARY MARKET PERFORMANCE THROUGH AUCTION (AS OF OCTOBER 23, 2018) [In Trillion IDR ] 250 Incoming Bids Awarded Bids % Bid to Cover Ratio (RHS) 4, ,44 Average Incoming Bid 2017 = IDR39.72T/ auction 2,62 2,38 Average Awarded Bid 2017 = IDR17.61T/ auction 2,80 3,16 3,00 2,58 2,50 2,57 2,44 2,22 3,50 3,00 2,50 1,93 2,01 1,83 1,76 2,01 1,97 1,86 2,05 2, ,31 1,57 1,50 1, ,50 0 0,00 Average incoming bid for GDS in 2018 = IDR41.60 tn/auction while average awarded bid for GDS in 2018 = IDR18.21 tn/auction The first auction in 2018 recorded highest incoming bid ever, amounted IDR86.2 tn or equiv. USD6.39 bn (JISDOR a.o. Jan. 3, 2018 = IDR13,498/USD) *) Surat Utang Negara (SUN) 7 7

8 GS* PRIMARY MARKET PERFORMANCE THROUGH AUCTION (AS OF OCTOBER 30, 2018) [In Trillion IDR ] 300 Incoming Bids Awarded Bids % Bid to Cover Ratio (RHS) 4, ,67 Average Incoming Bid 2017 = IDR27.99T/ auction 2,00 2,07 2,81 2,37 Average Awarded Bid 2017 = IDR11.74T/ auction 2,04 1,98 2,83 3,36 1,84 2,12 2,95 1,92 1,78 1,85 2,44 2,16 1,99 2,49 2,33 2,22 3,50 3,00 2,50 2,00 1,50 1, , Average incoming bid for GS in 2018 = IDR27.19 tn/auction while Average awarded bid for GS in 2018 = IDR12.09 tn/auction *) Surat Berharga Negara (SBN) 8

9 REPUBLIC OF INDONESIA JPY100BN 3YR, 5YR, 7YR and 10YR FIXED SAMURAI BONDS 9

10 SEC-REGISTERED SHELF EUR1bn 7-YEAR and USD1bn 10-YEAR ISSUANCE P P P Republic of Indonesia s inaugural SEC Shelf takedown At MS+115bps (1.750%), the EUR tranche represents the lowest-ever EUR cost of funding for the Republic The transaction achieved the sovereign s funding objectives with limited New Issue Concessions 5bps on the EUR and 10bps USD tranches Pricing Date: 17 April 2018 Issuer: Republic of Indonesia Issue Rating: Baa2 (Moody s) / BBB- (S&P) / BBB (Fitch) Issue: Senior Unsecured, Fixed Rate Notes Format: SEC-registered Settlement Date: 24 April 2018 Currency: EUR USD Tenor: 7-year 10-year Maturity Date: 24 April April 2028 Tranche Size: EUR1bn USD1bn Benchmark Yield: 0.630% (MS) 2.816% (UST) Spread to Benchmark: MS+115bps UST+131.4bps Re-offer Yield: 1.780% 4.130% Coupon: 1.750% 4.100% Listing: SGX-ST, Frankfurt Stock Exchange Terms: USD200k/1k denoms, New York law Joint Bookrunners: CA-CIB / Deutsche Bank / GS / HSBC / Mandiri Billing & Delivery: Deutsche Bank Transaction Highlights Capitalizing on the positive tone following Moody s upgrade of the sovereign rating to Baa2 from Baa3 on 13 April 2018, the Republic launched the USD tranche on 16 April 2018 Asia morning and the EUR tranche on Europe open Started at 4.40% area Initial Price Guidance, the USD1bn 10-year tranche was eventually priced at 4.13%, representing a 27bps compression from start to finish Similarly, the EUR1bn 7-year tranche was launched at MS+137.5bps area and compressed 22.5bps to price at MS+115bps Total orderbook was 2.9x oversubscribed at Final Price Guidance, with EUR3.0bn orders on the EUR tranche and USD2.7bn orders on the USD tranche Diversification of investor base 179 total accounts on the EUR tranche and 136 accounts on the USD tranche Breakdown of Distribution by Geography Breakdown of Distribution by Investor Type EUR 7-year USD 10-year EUR 7-year USD 10-year Rest of Europe 11% Switzerland 4% Italy 13% France 5% US 7% Germany 17% Indonesia 12% Asia ex- Indonesia 15% UK 16% Indonesia 7% Europe 19% Asia ex- Indonesia 24% US 50% Insurance / Pension 11% Banks 23% Central Banks / SWFs 4% Private Banks 1% Asset Managers 61% Insurance / Pension 16% Banks 15% Central Banks / SWFs 18% Private Banks 1% Asset Managers 50% 8 10

11 Sukuk Global Issuance USD3 bn Trust Certificates due 2023 and 2028 On February 22, 2018, the Republic of Indonesia successfully priced an international sukuk offering totaling USD3 bn, including its debut offering in green format. Summary Terms of Offering Transaction Highlights Obligor Issuer Issuer Rating Exp. Issue Rating Instrument Format. Status Aggregate Size The Government of the Republic of Indonesia, represented by the Ministry of Finance Perusahaan Penerbit SBSN Indonesia III Baa3 Moody s (Positive) / BBB- S&P (Stable) / BBB Fitch (Stable) Baa3 Moody s / BBB- S&P / BBB- Fitch USD Wakala Trust Certificates ( Sukuk ), issued under a USD25 bn Trust Certificate Programme 144A / RegS registered, senior unsecured 5-year USD3,000 mm 10-year Maturity Mar 1, 2023 Mar 1, 2028 Tranche Size USD1,250 mm USD1,750 mm Profit Rate 3.750% p.a. (30/360) 4.400% p.a. (30/360) Reoffer Price / Yield / 3.750% / 4.400% UST Benchmark (Price / Yield) 2.375% 01/31/23 (98-22¾ / 2.655%) 2.750% 02/15/28 ( / 2.923%) Reoffer Spread bp bp Use of Proceeds General financing requirements in line with the Green Bond and Green Sukuk Framework General financing requirements External Reviewer CICERO second party opinion ㄧ Other Terms USD200k/1k denominations, English and Indonesia law, Singapore and NASDAQ Dubai listing First-ever green sukuk offering by any sovereign globally First USD sovereign green offering, in either sukuk or conventional formats Accessed a window of relative stability without any competing supply for aggregate size of USD3 bn, which remains to be the largest sukuk offering by a non-gcc issuer to-date Maximized green structure and full investment grade ratings to set all-time low spreads to U.S. Treasury for any sukuk offering by the Republic of Indonesia Set the flattest curve between any 5- and 10-year sukuk offering by the Republic, at 65 bp Over USD7 bn of demand at pricing, featuring sponsorship from investors of the highest quality, green focused funds and sovereign-related entities inclusive Demand and Allocation Statistics 5-year Green Sukuk 10-year Sukuk Indications / Book Cover USD3,000 mm / 2.4x USD4,200 mm / 2.4x Allocations USD1,250 mm USD1,750 mm Number of Accounts Allocations by Geography Allocation by Type 1% 20% 10% 10% 32% 10% 24% 18% 22% 15% 25% 32% Islamic Asia EU US Indonesia 29% 40% 71% 29% 7% 1% 6% 39% 12% 47% Asset Manager / Fund Manager Bank Pension Fund / Insurance SWF / Central Bank Private Bank Green Non Green 11

12 USD GLOBAL BONDS ISSUANCE (PREFUNDING) Investor Breakdown by Region RI % 25% 21% 40% 10% 20% 1% RI % 22% 65% RI % 22% Issuer Republic of Indonesia Series RI0123 RI0128 RI0148 Issuer Rating Baa3 (Moody s) / BBB- (S&P) / BBB- (Fitch) Issue Rating Baa3 (Moody s) / BBB- (S&P) / BBB- (Fitch) Pricing Date December 4, 2017 Settlement Date December 11, 2017 Maturity January 11, 2023 January 11, 2028 January 11, 2048 Size USD$1.00bn USD$1.25bn USD$1.75bn Tenor 5yr 10yr 30yr Coupon (p.a.) 2.950% 3.500% 4.350% Re-offer Yield 3.000% 3.550% 4.400% Re-offer Spread 85.6 bps bps bps Investor Breakdown by Investor Type 10% 26% 0% 2% RI % 32% 47% 2% 8% RI % 54% 0% 4% RI % 59% Europe USA Asia (ex-indonesia) Indonesia Format Listing SEC-Registered Standalone Singapore Stock Exchange and Frankfurt Stock Exchange Asset / Fund Manager Banks Insurance /Pension Funds Private Banks Sovereign Wealth Funds Some achievements of Indonesia s International Bonds issuance with SEC-Registered format: 1. Lowest re-offer spread for 5yr, 10yr, and 30yr tenors, with the final order book of issuance totaling USD9.93 billion of 715 bookings; 2. Lowest yield for 5yr and 30yr tenors; 3. New issue concession negative with total transaction USD4 billion, including the largest for the issuance of Government bonds in the Asian region; 4. Flattest curve ever between 5yr, 10yr, and 30yr tenors. 12

13 SECONDARY MARKET PERFORMANCE Yields of Benchmark Series (%) 22 Average Daily Trading As of October 30, 2018 As of Oktober 30, Y Y 15Y 20Y OUTRIGHT REPO NON BI REPO BI 8.32 (5Y), 8.58 (10Y), 8.79 (15Y), 9.01 (20Y) Oct'18 Jul'18 Apr'18 Jan'18 Oct'17 Jul'17 Apr'17 Jan'17 Oct'16 Jul'16 Apr'16 Jan'16 Oct'15 Jul'15 Apr'15 Jan'15 Oct'14 Jul'14 Apr'14 Jan'14 Oct'13 Jul'13 Apr'13 Jan'13 Oct'12 Jul'12 Apr'12 Jan'12 Oct'11 Source: IBPA - Peers 10y Govt Bonds Yield LCY 10 Year Government Bonds (as of October 30, 2018) Latest Yield Prev Day Change (in bps) Mar-18 Jun-18 Sep-18 s.d 30 Okt-18 Foreign Ownership V. 10Y Yield Movement YTD Change (in bps) As of October 30, 2018 [%] HK ID JP KR MY PH SG TH US VN Source: Market Watch Asian Bond Online [Rp Triliun] Non Residen [RHS] 5.00 Sep-17 Yield 10 Y [LHS] 600 Nov-17 Jan-18 Mar-18 May-18 Jul-18 Sep-18 13

14 OWNERSHIP OF TRADABLE DOMESTIC GOVERNMENT SECURITIES (in trillion IDR) Description Dec-14 Dec-15 Dec-16 Jan-17 Dec Oct-18 Banks* % % % % % % Govt Institutions (Bank Indonesia**) % % % % % % Bank Indonesia (gross) % % % % GS used for Monetary Operation % % % % Non-Banks % % 1, % 1, % 1, % 1, % Mutual Funds % % % % % % Insurance Company and Pension Fund % % % % % % Foreign Holders % % % % % % Foreign Govt's & Central Banks % % % % % 159, % Individual % % % % % % Others % % % % % % Total 1, % 1, % 1, % 1, % 2, % 2, % 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. 14

15 Oct-15 Dec-15 Feb-16 Apr-16 Jun-16 Aug-16 Oct-16 Dec-16 Feb-17 Apr-17 Jun-17 Aug-17 Oct-17 Dec-17 Feb-18 Apr-18 Jun-18 Aug-18 Oct-18 FOREIGN INVESTOR ACTIVITY FOREIGN INVESTORS ARE MOSTLY DOMINATED BY HIGH QUALITY LONG TERM INVESTORS Foreign Ownership - Proportion by Tenor Monthly Net Buyer (Seller) - Non Resident As of October 30, 2018 [In Trillion IDR ] As of October 30, % 50,00 Net Inflows [LHS] Net Inflows Over Total Foreign Holdings [RHS] 0,1 80% 44,5% 42,8% 44,7% 36,0% 37,0% 37,5% 40,00 30,00 31,33 22,59 34,22 34,62 33,62 0,08 0,06 60% 40% 20% 0% 38,1% 38,2% 39,8% 37,5% 37,3% 32,5% 37,4% 35,6% 37,1% 32,0% 33,6% 39,0% 12,9% 17,8% 17,3% 15,2% 20,1% 11,8% 5,4% 3,7% 5,1% 5,3% 1,3% 1,0% 5,2% 4,6% 3,2% 3,5% 5,0% 4,2% Dec 13 Dec 14 Dec-15 Dec-16 Dec Oct %Foreign Ownership of Total 20,00 10,00 0,00-10,00-20,00-30,00 8,38 5,39 21,37 19,80 9,46 18,30 20,09-4,21 22,03 15,04 9,06 16,89-9,35 9,75-19,58 19,70 6,38 10,33 14,40 4,99 9,61-23,17 16,53 12,80 10,56 9,10 5,33-3,64-4,94-13,45-11,53-21,55 0,04 0,02 0-0,02-0,04-0,06-0,08 15

16 SOUND GOVERNMENT DEBT PORTFOLIO MANAGEMENT Stable debt to GDP ratio with diversified funding profile 100% 80% 60% 40% 20% 0% 28.3% 27.5% 29,4% 29.7%* 23.0% 24.9% 24.7% 68,8% 70,0% 74,1% 76,2% 79,1% 81,1% 81,2% 31,2% 30,0% 25,9% 23,8% 20,9% 18,9% 18,8% ,0% 25,0% 15,0% 5,0% -5,0% Financing needs mostly fulfilled from Gov t Securities Issuance Loans (LHS) Securities (LHS) Govt Debt / GDP (%) (RHS) *Note: using GDP assumption IDR14, as mentioned in APBN Kita 3% 3% 2% 2% 1% 3% 1% 3% 4% 4% 14% 3% 12% 3% 9% 8% 7% 6% 24% 29% 29% 32% 31% 29% 56% 53% 57% 55% 58% 60% Well Diversified Across Different Currencies IDR USD JPY EUR Other 16

17 SOLID POLICY COORDINATION IN MANAGING FINANCIAL MARKETS VOLATILITY 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 2018 Budget 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 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 CMP Swap facility arrangements based on international cooperation Enhancing coordination between government institutions and continuous dialogue with market participants Implementing Crisis Management Protocol (CMP) State s Budget State Owned Enterprises (BUMN) s Budget Social Security Organizing Agency (BPJS) s Budget Bond Stabilization Framework First Line of Defense Buyback fund at DG of Budget Financing and Risk Management Investment fund at Public Service Agency (BLU) (min. level Aware) Related SOEs (min. level Aware) BPJS (min. level Aware) Second Line of Defense BSF Implementing Bond Stabilization Framework (BSF) State s Budget State General Treasury Account (Rekening KUN) (min. level Alert) Accumulated cash surplus (SAL) (min. Level Crisis) 17

18 Directorate of Government Debt Securities Directorate General of Budget Financing and Risk Management Ministry of Finance of The Republic of Indonesia Frans Seda building, 4th Floor Jl. Wahidin Raya No. 1, Jakarta Pusat Postal Code: Phone: Fax. : Website: surat.utang.negara@kemenkeu.go.id END OF PRESENTATION