Government Securities Management December 28, 2015 Directorate of Government Debt Securities Directorate General of Budget Financing and Risk Management Ministry of Finance of The Republic of Indonesia
OUTLINE 1. Government Securities Management and Financing Strategy 2. Government Securities Performance 3. Crisis Management Protocol & Bond Stabilization Framework 4. Debt Outstanding & Risk Profile DISCLAIMER: This presentation does not constitute or form part of and should not be construed as an offer to sell or issue or the solicitation of an offer to buy or acquire securities of the Republic in any jurisdiction or as an inducement to enter into investment activity. No part of this presentation, nor the fact of its distribution, should form the basis of, or be relied on in connection with, any contract or commitment or investment decision whatsoever. This presentation is not and should not be construed as financial, legal, tax, investment or other product advice. 2
Government Securities Management and Financing Strategy
General Strategy for Debt Financing 2015 1. Optimizes Governments securities (SBN) issuance from domestic sources to fulfill Budget need and uses foreign debts as complimentary; 2. Debt instruments take 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. 4
Financing Trend, 2004 2015 (trillion IDR) 300 250 200 1.9 2.3 2.2 1.9 2.5 2.0 150 100 1.1 0.9 1.3 1.6 1.1 1.5 1.0 50 0.5 0.7 0.5 0-50 0.1 - -100 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014* 2015** Govt Securities - net 6.9 22.6 36.0 57.2 85.9 99.5 91.1 119.9 159.7 224.7 265.0 297.7 Domestic Loan - - - - - 0.4 0.6 0.8 0.4 0.5 1.7 External Loan - net (28.1) (10.3) (26.6) (26.6) (18.4) (12.4) (4.6) (17.8) (23.5) (5.8) (15.4) (20.0) Others/Non-Debt - net 42.0 (1.2) 20.0 9.1 16.6 25.5 4.6 28.3 38.1 18.1 (12.2) (65.5) Budget Defisit, % to GDP 1.1 0.5 0.9 1.3 0.1 1.6 0.7 1.1 1.9 2.3 2.2 1.9 (0.5) Notes: * Preliminary 2014 ** Revised Budget 2015 5
Government Budget FY 2015 Description Budget % to GDP 2015 In billion IDR Revised Budget A. Total Revenue 1,793,588.9 16.1 1,761,642.8 15.1 B. Total Expenditure 2,039,483.6 18.3 1,984,149.7 17.0 Interest Payment 151,968.3 1.4 155,730.9 1.3 C. Primary Balance (93,926.4) (0.8) (66,776.0) (0.6) D. Deficit (245,894.7) (2.2) (222,506.9) (1.9) E. Financing 245,894.7 2.2 222,506.9 1.9 I. Non Debt (8,961.2) (0.1) (56,874.0) (0.5) II. Debt 254,855.9 2.3 279,380.9 2.4 1. Government Securities (Net) 277,049.8 2.5 297,698.4 2.5 2. Loan (Net) (22,193.9) (0.2) (18,317.5) (0.2) i. Foreign Loan (Net) (23,815.1) (0.2) (20,008.1) (0.2) Disbursement 47,037.1 0.4 48,647.0 0.4 - Program Loan 7,140.0 0.1 7,500.0 0.1 - Project Loan 39,897.1 0.4 41,147.0 0.4 On Lending (4,319.4) (0.0) (4,471.9) (0.0) Foreign Loan Principal Payment (66,532.8) (0.6) (64,183.2) (0.5) ii. Domestic Loan (Net) 1,621.2 0.0 1,690.6 0.0 Disbursement 2,000.0 0.0 2,000.0 0.0 Domestic Loan Principal Payment (378.8) (0.0) (309.4) (0.0) Assumptions : GDP (trillion IDR) (Y.o.Y) 11,146,943.0 11,700,808.0 Growth (%) 5.8 5.7 Inflation (%) y-o-y 4.4 5.0 3-month-SPN (%) 6.0 6.2 IDR/USD (average) 11,900 12,500 % to GDP Financing sources Revised Budget 2015 come from debt financing (85.78% from Government Securities, 9.62% from Loan) and the rest 4.61% from non debt financing. Stand-by loans are in place to anticipate adverse situations. 6
Government Securities Financing (Gross) 2015 (in billion Rp) Budget Deficit Original 1.9% 2.23% 2.59% Revenue 1,761.6 1,649.7 1,561.9 Expenditure 1,984.1 1,909.7 1,860.4 Surplus/(Defisit) (222.5) (260.0) (298.5) Additional Financing 37.5 76.0 Cash Financing 459.7 497.2 535.6 Government Securities (gross) 452.2 461.7 481.2 Domestic 339.3 348.8 361.4 Government Debt Securities 261.3 263.9 276.6 Sukuk 78.0 84.9 84.9 Global Bond 112.9 113.0 119.7 Government Debt Securities 86.5 86.6 93.3 Sukuk 26.4 26.4 26.4 External Loan 7.5 35.5 54.5 Domestic: Auction: conventional securities: 23 x Islamic securities: 22 x Non-Auction: retail bonds: ORI + Sukuk Retail. International Bonds: 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 30% from target gross Issuance targets for GDS, Sukuk and ATM target: GDS (SUN): 75.9% Sukuk: 24.1% ATM for GS (SBN): 8.4 year 7
Securities Financing Realization 2015 % Realization to Revised Budget Realization Explanation Revised Budget 2015* (a.o.dec 4, 2015)* 2015 Government Securities Net 349,944,127 349,944,128 100.00% Government Securities Maturing in 2015 and Buyback 152,418,614 152,418,614 100.00% Issuance Need 2015* 502,362,741 502,362,741 100.00% Government Debt Securities (GDS) 384,401,563 Domestic GDS 297,832,874 -Coupon GDS 202,110,000 -Conventional T-Bills 52,200,000 -Private Placement 16,084,119 -Retail Bonds 27,438,755 International Bonds 86,568,689 -USD GMTN 50,372,939 -Euro GMTN 18,473,050 -Samurai Bonds 11,054,200 -Domestic GDS 6,668,500 Government Islamic Debt Securities 117,961,178 Domestic Government Islamic Debt Securities 91,539,178 - IFR/PBS/T-Bills Sukuk (Islamic Fixed Rated Bond/Project Based Sukuk) 59,990,000 - Retail Sukuk 21,965,035 - Private Placement 9,584,143 Global Sukuk 26,422,000 * Under scenario Deficit 2.78% of GDP 8
GOVERNMENT SECURITIES FINANCING STRATEGY 2016
GENERAL DEBT FINANCING STRATEGY 2016 6. Active debt management and ALM 1. Manageable Debt-to-GDP ratio 2. Financial inclusion & market deepening DEBT POLICY IN 2016 BUDGET 5. Loan as an alternative instrument for financing 4. Selective external loan (infrastructure and energy sector) 3. Debt issuance for productive activity 10
GOVERNMENT BUDGET FOR 2016 In IDR Trillion, where applicable Description 2016 Budget A. Total Revenue 1,822.5 I. Domestic Revenue 1,820.5 1. Taxation 1,546.7 2. Non-Taxation 273.8 II. Grant 2.0 B. Government Spending 2,095.7 I. Central Government Spending 1,325.6 1. Ministerial Spending 784.1 2. Non-Ministerial Spending 541.4 II. Fund Transfer and Village Fund 770.2 C. Primary Balance (88.2) D. Deficit (273.2) Deficit to GDP (2.1%) E. Financing 273.2 I. Domestic 272.8 a. Domestic Banks 5.5 b. Domestic Non-Banks 267.3 1. Government Securities (net) 327.2 2. Capital Injection (48.4) II. Foreign 0.4 Surplus (Deficit) Funding 11
GOVERNMENT SECURITIES INDICATIVE FINANCING PLAN FOR 2016 Indicative Target (IDR tn) Instruments Preliminary Budget Government Securities (Net) 327,224 Weekly Auction: Conventional securities: Islamic securities: Domestic Bonds 23 x 23 x Redemption 187,202 Cash Management 15,000 Buyback 3,000 Government Securities (Gross) 532,426 Composition Domestic 76% Auction 66% Non-Auction 10% International Bond 24% Non-Auction: Retail bonds: Private Placement SR (Q1), SBR (Q2), Sukuk Tabungan (Q3), and ORI (Q4) Based on request International Bonds Issuance (USD, EUR, JPY-denominated) Issuance of International Bonds as complement to avoid crowding out in domestic market and provide benchmark for corporate issuance, consists of USD, YEN or EURO global bonds Maximum issuance international bond 30% from target gross Issuance targets for GDS, Sukuk and ATM target Government Debt Securities (SUN): 76 %; Sukuk: 24% ATM for Goverrnment Securities (SBN) by auction: 10-12 year. 12
Government Securities Performance
GDS Primary Market Performance 2015 120,000 Incoming Bids Awarded Bids Foreign Incoming Bids Foreign Awarded Bids % Foreign Incoming Bids (RHS) *as of Dec 1, 2015 60% 100,000 80,000 60,000 Average incoming bids 2014 = Rp22,65T/auction Average awarded bids 2014 = Rp10,97T/auction 50% 40% 30% 20% 40,000 10% 20,000 0% - -10% Average Foreign incoming bids 2015 is Rp6.87T, compare to period in 2014, which reached 7.58T Average incoming bids 2015 = Rp20.84T, decrease from average incoming bids 2014 = Rp22.65T Average awarded bid 2015 = Rp10.59T while average awarded bid 2014 = Rp10.97 T. 14 14
GS Primary Market Performance 2015 120,000 Incoming Bids Awarded Bids Foreign Incoming Bids Foreign Awarded Bids % Foreign Incoming Bids (RHS) *as of Dec 1, 2015 60% 100,000 50% 80,000 Avr. Incoming Bid 2014: 14,02T Avr. Awarded bids 2014 = 6,52T 40% 60,000 Avr. Foreign Incoming Bid 2014: 4,42T 30% 40,000 20% 20,000 10% - Jan-14 Feb-14 Mar-14 Apr-14 May-14 Jun-14 Jul-14 Aug-14 Sep-14 Oct-14 Nov-14 Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 1-Des-15 Average Foreign incoming bids 2015 is Rp4.65T Average incoming bids 2015 = Rp14.05T, average incoming bids 2014 = Rp14.02T Average awarded bid 2015 = Rp6.75T, while average awarded bid 2014 = Rp6.52T. 0% 15 15
Primary Market Performance 2015: Global Bonds Summary Terms of Offering Issuer Issuer Ratings RI0125 RI0145 SNI-25 RIEUR0725 Baa3 Stable (Moody s), BB+ Stable (S&P), BBB- Stable (Fitch) Republic of Indonesia Baa3 Stable (Moody s), BB+ Positive (S&P), BBB- Stable (Fitch) BBB- stable (Fitch), BB+ positive (S&P), Baa3 stable (Moody s) Issue Ratings Baa3 (Moody s), BB+ (S&P), BBB- (Fitch) Baa3 (Moody's) / BB+ (S&P) / BBB- (Fitch) BBB- (Fitch), BB+ (S&P), Baa3 (Moody s) Issue USD fixed rate USD fixed rate EUR fixed rate Size USD2 billion USD2 billion USD2 billion EUR1,250 billion Pricing / Settlement Date 8 January / 15 January 2015 8 January / 15 January 2015 21 May / 28 May 2015 23 July / 31 July 2015 Maturity 10 years due 15 January 2025 30 years due 15 January 2045 10 years due 28 May 2025 30 July 2025 Coupon 4.125% payable semi annually 5.125% payable semi annually 4.325% payable semi annualy 3,375% payable semi annually Reoffer Yield / Price 4.200% / 99.393% 5.200% / 98.867% 4.325% / 100% 3,555% / 98,507% Format Rule 144A / Reg S Rule 144A / Reg S Reg-S/144 A Rule 144A / Reg S Listing SGX-ST SGX-ST SGX-ST & Nasdaq Dubai SGX-ST, Frankfurt Open Market Total Book Order USD10.05 billion USD9.23 billion USD6.8 billion EUR2,4 billion Distribution Indonesia 13%, Asia 15%, Europe 24%, USA 48% Indonesia 4%, Asia 20%, Europe 23%, USA 53% Indonesia 10%, Asia 12%, Europe 16%, USA 21%, Islamic & Middle East investor 41% Indonesia 7%, Asia 13%, Europe 43%, USA 37% Investor Type Fund / Asset Managers 73%, Banks 14%, Insurance / Pension Funds 9%, Private Banks 2%, SWF 2% Fund / Asset Managers 75%, Banks 8%, Insurance / Pension Funds 13%, Private Banks 2%, SWF 2% Fund / Asset Managers 39%, Banks 42%, Central Bank 15%, Inssurance Companies 2%, Private Bank 2% Fund / Asset Managers 66%, Banks/Private Banks 16%, Insurance / Pension Funds 9%, Central Banks/Sovereigen Funds 9% 16
Primary Market Performance 2015: Samurai Bonds Summary Terms of Offering RIJPY0818 RIJPY0820 RIJPY0825 Issuer Republic of Indonesia Issue Ratings BBB- (JCRA), BBB- (R&I), Baa3 (Moody), BBB- (Fitch) BBB- (JCRA), BBB- (R&I), Baa3 (Moody), BBB- (Fitch) Issue JPY fixed rate JPY fixed rate JPY fixed rate Size JPY22,5 bilion JPY22,5 bilion JPY55 billion Pricing / Settlement Date 04 August/ 13 August 2015 04 August/ 13 August 2015 04 August/ 13 August 2015 Maturity 13 August 2018 13 August 2020 13 August 2025 Coupon 1,08% 1,38% 0,91% Price 100% 100% 100% Spread Over Yen Swap Other Side 87 bps over JP 3yr Swap 108 bps over JP 5yr Swap 27 bps over JP 10yr Swap Yen Swap Rate 0,21% 0,30% 0,64% Total Book Order JPY 22,5 billion JPY 22,5 billion JPY82,9 billion Distribution Asia 100% Asia 100% Asia 100% Investor Type City Bank 17.8%, Trust Banks 1.3%, Public Funds 29.1%, Life Insurance 3.3%, Regional Banks 7.1%, Shinkins 0.2%, Others 41.2% City Bank 65.5%, Specialized Banks 5.8%, Public Funds 0.9%, Life Insurance 8.7%, Property Insurance 1.8%, Regional Banks 4.2%, Shinkins 12.2%, Others 0.9% 17
Secondary Market Performance Yields of Benchmark Series steadily decrease Activities of the domestic bonds are growing [In Percentage] As of December 8, 2015 35.00 22 20 18 16 14 12 10 8 6 4 2 Des'08 Apr'09 Agust'09 Des'09 Apr'10 Agust'10 Des'10 Apr'11 Agust'11 Des'11 Apr'12 Agust'12 Des'12 Apr'13 5Y 10Y 15Y 20Y 8.49 (5Y), 8.52 (10Y), 8.66 (15Y), 8.8 (20Y) Des'15 Agust'15 Apr'15 Des'14 Agust'14 Apr'14 Des'13 Agust'13 30.00 25.00 20.00 15.00 10.00 5.00-0.34 0.22 4.39 OUTRIGHT REPO BANK REPO BI 20.32 17.69 15.61 12.57 12.87 7.45 10.94 7.19 6.48 6.30 1.54 3.07 0.16 0.41 0.38 5.88 5.73 5.31 As of December 22, 2015 8.80 4.84 0.53 3.39 1.14 0.81 4.65 0.77 0.77 0.50 0.72 0.76 0.83 0.52 0.68 0.80 0.62 7.91 10.91 11.11 9.18 6.39 9.37 12.33 8.21 10.90 8.89 7.52 9.07 7.90 Bid Ask Spread 10 Y Government Bond Turn Over 10 Y Government Bond 40 35 30 Spread (bid-ask) As of December 8, 2015 Spread 8.528 bps (ask 8.48 bid 8.576) 15.00 12.00 14.12 12.88 10.75 10.53 25 20 15 9.00 6.00 5.12 7.04 5.15 10 5 3.00 0-2008 2009 2010 2011 2012 2013 2014 18
Yield GS on peer s market LCY 10 Year Government Bonds Latest Yield YTD Change (BP) MTD Change (BP) 22.0 [in percentage] HK 1.540-35.6-2.5 ID 8.754 +95.8 +14.3 JP 0.267-6.2-4.0 KR 2.097-50.8-15.0 MY 4.234 +8.7 +3.5 PH 4.099 +23.5 +2.9 SG 2.410 +12.9-10.2 TH 2.516-21.3-21.1 US 2.230 +5.9 +2.4 VN 7.200-3.0-0.8 20.0 18.0 16.0 14.0 12.0 10.0 8.0 6.0 4.0 2.0 - Tenor 28-Dec-15 21-Dec-15 27-Nov-15 9-Feb-12 23-Sep-11 27-Oct-08 13 Sep'05 1Y 7.27 7.48 7.06 3.30 5.29 19.37 2Y 8.35 8.42 7.94 4.21 6.01 17.35 14.59 3Y 8.64 8.61 8.34 4.33 6.13 19.93 4Y 8.68 8.64 8.35 4.39 6.54 17.17 14.14 5Y 8.75 8.69 8.52 4.44 6.69 17.46 14.96 6Y 8.78 8.75 8.59 4.79 6.81 17.05 15.24 7Y 8.79 8.76 8.59 4.88 7.08 17.06 16.17 10Y 8.89 8.86 8.73 5.02 7.43 20.91 15.75 15Y 9.03 8.95 8.83 5.47 7.83 16.65 14.12 20Y 9.01 9.00 8.79 5.96 8.20 20.27 30Y 9.27 9.35 9.14 6.17 8.29 20.37 28 Dec '15 21 Dec '15 27 Nov '15 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 Market Watch as of December 29, 2015 Source: Asian Bonds Online Source: IDMA, Bloomberg, as of December 28, 2015 19
Ownership of Tradable Domestic Government Securities (in trillion Rp) ` Dec-10 Dec-11 Dec-12 Dec-13 Dec-14 Jan-15 Jun-15 Nov-15 Dec'28-2015 Banks 217,27 33,88% 265,03 36,63% 299,66 36,73% 335,43 33,70% 375,55 31,04% 372,66 29,95% 369,11 27,21% 413,99 28,79% 371,50 25,56% Govt Institutions (Bank Indonesia*) 17,42 2,72% 7,84 1,08% 3,07 0,37% 44,44 4,47% 41,63 3,44% 38,37 3,08% 80,58 5,94% 67,09 4,67% 128,77 8,86% Non-Banks 406,53 63,40% 450,75 62,29% 517,53 63,09% 615,38 61,83% 792,78 65,52% 833,42 66,97% 906,74 66,85% 956,85 66,54% 953,15 65,58% Mutual Funds 51,16 7,98% 47,22 6,53% 43,19 5,27% 42,50 4,27% 45,79 3,78% 47,16 3,79% 56,28 4,15% 59,47 4,14% 60,79 4,18% Insurance Company 79,30 12,37% 93,09 12,86% 83,42 10,17% 129,55 13,02% 150,60 12,45% 149,95 12,05% 161,81 11,93% 170,86 11,88% 171,98 11,83% Foreign Holders 195,76 30,53% 222,86 30,80% 270,52 32,98% 323,83 32,54% 461,35 38,13% 500,83 40,25% 537,53 39,63% 548,52 38,15% 550,72 37,89% Foreign Govt's&Central Banks** 50,06 6,10% 78,39 7,88% 103,42 8,55% 104,66 8,41% 102,34 7,54% 109,49 7,61% 110,32 7,59% Pension Fund 36,75 5,73% 34,39 4,75% 56,46 6,88% 39,47 3,97% 43,30 3,58% 43,00 3,46% 46,32 3,42% 48,69 3,39% 49,56 3,41% Securities Company 0,13 0,02% 0,14 0,02% 0,30 0,04% 0,88 0,09% 0,81 0,07% 0,65 0,05% 0,74 0,05% 0,15 0,01% 0,02 0,00% Individual 32,48 3,26% 30,41 2,51% 28,35 2,28% 32,23 2,38% 52,40 3,64% 43,04 2,96% Others 43,43 6,77% 53,05 7,33% 63,64 7,76% 46,68 4,69% 60,51 5,00% 63,49 5,10% 71,82 5,29% 76,76 5,34% 77,05 5,30% Total 641,21 100% 723,61 100% 820,27 100% 995,25 100% 1.209,96 100% 1.244,45 100% 1.356,43 100% 1.437,93 100% 1.453,43 100% 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). 20
Foreign Investor Activity (yearly) Investors Net Buy/Sell (IDR trillion) 2011 2012 2013 2014 2015 Domestic 55.29 49.00 121.68 77.19 137.94 Foreign 27.10 47.67 53.31 137.52 81.02 Total 82.39 96.66 174.99 214.71 218.97 Foreign Net Buy/Sell up to September (YTD) & yearly total (IDR) trillion) 2015 2014 Note: as of November 25, 2015 67.41 81.02 136.03 137.52 Foreign investors (Asing) recorded a net buy of IDR81.02 trillion (year to date). While during the year of 2014 foreign net buy reached IDR137.52 trillion. In October 2015 foreign investor recorded net buy of IDR67.41 trillion, thus during November 2015 (until 25 th November), net buy reached IDR13.61 trillion. 2013 47.59 53.31 2012 27.47 47.67 Oktober YTD 2011 24.03 27.10 0 20 40 60 80 100 120 140 160 Source: Bank Indonesia 21
Feb-13 Apr-13 Jun-13 Aug-13 Oct-13 Dec-13 Feb-14 Apr-14 Jun-14 Aug-14 Oct-14 Dec-14 Feb-15 Apr-15 Jun-15 Aug-15 Oct-15 28 Dec 15 Foreign Investor Activity Foreign Ownership - Proportion by Tenor [In IDR Trillion] Net Buyer (Seller) - Non Resident As of December 28, 2015 100% 50,00 Capital Inflows [LHS] capital inflows over foreign [RHS] 0,1 80% 44,46% 42,81% 43,94% 44,56% 44,00% 44,67% 45,33% 45,18% 40,00 39,48 0,08 60% 40% 20% 0% 38,13% 38,61% 39,63% 37,59% 37,10% 38,15% 37,89% 32,54% 32,04% 33,58% 12,88% 15,23% 34,88% 36,18% 36,98% 39,69% 39,50% 38,31% 12,92% 12,46% 11,43% 12,30% 11,02% 11,88% 5,41% 3,73% 2,89% 2,34% 1,54% 1,51% 1,54% 1,35% 5,20% 4,65% 5,38% 4,45% 3,33% 3,31% 3,85% 3,28% Dec 13 Dec 14 Mar-15 Jun-15 Sep-15 Oct-15 Nov-15 28 Dec-15 30,00 20,00 10,00 0,00 (10,00) (20,00) (30,00) 8,44 (0,88) 17,97 4,22 (19,98) 2,81 (1,76) 10,13 23,98 6,08 (0,37) 4,82 16,49 15,77 16,10 20,15 6,43 14,67 15,95 12,49 13,17 21,34 (19,84) 6,84 (3,59) 4,10 6,31 23,04 (3,90) (7,96) 8,38 5,39 (2,30) 13,57 0,06 0,04 0,02 0-0,02-0,04-0,06-0,08 0-1 1-2 2-5 5-10 10 %Foreign Ownership of Total Foreign investors mostly dominated by high quality long term investors 22
Crisis Management Protocol & Bond Stabilization Framework
Implement Measures to Manage External Volatility to mitigate sudden reversals Pre-emptive Measures Implementing Crisis Management Protocol (CMP) Implementing Bond Stabilization Framework (BSF) Enhancing coordination between government institutions and continuous dialogue with market participants Specific policies in place to address crises enacted in 2015 budget law Crisis Management Protocol Swap facility arrangements based on international cooperation Indicators to determine crisis level of Government Securities Market condition (normal, aware, alert, crisis) Several market indicators that are monitored daily: - 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 Bond Stabilization Framework First Line of Defense State s Budget State Owned Enterprises (BUMN) s Budget Social Security Organizing Agency (BPJS) s Budget Second Line of Defense State s Budget State Owned Enterprises (BUMN) s Budget Social Security Organizing Agency (BPJS) s Budget Buyback fund at DG of Budget Financing and Risk Management Investment fund at Public Service Agency (BLU) (min. level Aware) Related BUMNs (min. level Aware) BPJS (min. level Aware) State General Treasury Account (Rekening KUN) (min. level Alert) Accumulated cash surplus (SAL) (min. Level Crisis) Related BUMNs (min. level Alert) BPJS (min. level Alert) 24
Debt Outstanding & Risk Profile
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 2042 2043 2044 2045 2046-2060 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 2042 2043 2044 2045 2046-2060 Total Debt Maturity Profile as of End of November, 2015 Maturity Profile of Central Government by Instruments (in trillion IDR) 240 220 200 180 160 140 120 100 80 60 40 20-24% Loan Gov't Sec 76% Gov't Sec Loan Maturity Profile of Central Government by Currencies (in trillion IDR) 240 220 200 180 160 140 120 100 80 60 40 20 0 Domestic Foreign 56% 44% Foreign Domestic 26
Outstanding Central Government Debt by Instrument Description Nominal % a. Foreign Loan (in billion USD) 68,6 68,4 63,6 58,4 53,9 53,6 24,1% Bilateral 42,3 42,1 37,2 31,5 26,7 24,6 11,1% Multilateral 23,2 23,5 23,8 23,7 23,5 25,5 11,5% Commercial 3,0 2,8 2,5 3,3 3,7 3,5 1,6% Suppliers 0,1 0,1 0,0 0,0 0,0 0,0 0,0% b Domestic Loan (in billion USD) 0,0 0,1 0,19 0,2 0,2 0,3 0,1% c. Government Securities (in billion USD) 118,4 131,0 140,8 136,3 155,2 168,3 75,7% Foreign Currency Denominated 18,0 21,6 27,4 32,8 36,7 44,1 19,9% Rupiah Denominated 100,4 109,4 113,4 103,5 118,5 124,1 55,9% Total Central Government Debt (in billion USD) 2010 2011 2012 2013 2014 Nov-15 187,0 199,5 204,5 194,9 209,4 222,2 Total Central Government Debt (in trilion IDR) 1.681,7 1.808,9 1.977,7 2.375,5 2.604,9 3.074,8 Exchange Rate Assumption (IDR/USD1) 8.991,0 9.068,0 9.670,0 12.189,0 12.440,0 13.840,0 GDP (in trillion IDR) 6.864,1 7.831,7 8.615,7 9.524,7 10.542,7 Debt to GDP Ratio 24,5% 23,1% 23,0% 24,9% 24,7% Notes: * Preliminary Figures 27
Outstanding Central Government Debt by Currency 2010 2011 Original Currency IDR (in trillion) 902,6 993,0 1.098,0 1.263,9 1.477,5 1.722,1 Gov't Securities 902,4 992,0 1.096,2 1.261,7 1.474,6 1.718,2 Loan 0,2 1,0 1,8 2,2 2,9 3,9 USD (in billion) 39,6 43,9 49,8 56,8 61,0 69,1 Gov't Securities 16,9 20,4 25,6 31,3 34,2 39,7 Loan 22,8 23,5 24,2 25,4 26,8 29,4 JPY (in billion) 2.689,8 2.589,8 2.498,8 2.395,3 2.204,0 2.183,5 Gov't Securities 95,0 95,0 155,0 155,0 155,0 255,0 Loan 2.594,8 2.494,8 2.343,8 2.228,8 2.049,0 1.928,5 EUR (in billion) 5,4 5,0 4,5 4,2 5,1 6,1 Gov't Securities - - - - 1,0 2,3 Loan 5,4 5,0 4,5 4,2 4,1 3,9 Other currencies Equivalent in Billion USD 2012 2013 2014 Nov-15 ----------------Multiple Currencies ----------------------- IDR 100,4 109,5 113,5 103,7 118,8 124,4 56,0% USD 39,8 43,9 49,8 56,8 61,0 69,1 31,1% JPY 33,1 33,4 29,1 22,8 18,5 17,8 8,0% EUR 7,2 6,4 6,0 5,8 6,2 6,5 2,9% Other currencies 6,5 6,3 6,1 5,8 5,0 4,4 2,0% Total Eq. in Billion USD 187,0 199,5 204,5 194,9 209,4 222,2 Equivalent in Trillion IDR IDR 902,8 993,0 1.098,0 1.263,9 1.477,5 1.722,1 USD 357,6 397,9 481,9 692,0 758,3 955,9 JPY 297,6 302,5 281,2 278,3 229,8 246,2 EUR 65,0 58,5 57,5 71,1 76,9 89,9 Other currencies 58,6 57,1 59,1 70,2 62,4 60,7 Total Eq. in Trillion IDR 1.681,7 1.808,9 1.977,7 2.375,5 2.604,9 3.074,8 Foreign Currency Portion 46,3% 45,1% 44,5% 46,8% 43,3% 44,0% Exchange Rate Assumption USD/IDR 8.991 9.068 9.670 12.189,0 12.440,0 13.840,0 Notes: * Preliminary Figures 28
12.2% 10.7% 10.8% 10.5% 11.7% 12.7% 10.6% 9.9% 9.9% 11.2% 8.5% 7.2% 6.7% 6.8% 7.6% 8.9% 7.7% 7.5% 7.9% 8.7% Central Government Debt Ratios Debt to GDP Ratio Interest Payment to Revenue and Expenditure Ratio 30% 25% 20% 15% 10% 5% 0% 24.5% 23.1% 23.0% 24.9% 24.7% 2010 2011 2012 2013 2014* 10% 9% 8% 7% 6% 5% 4% 3% 2% 1% 0% 2010 2011 2012 2013 2014* Interest to Revenue Interest to Expenditure Debt Service to GDP Ratio Interest Payment to Tax Revenue & Central Government Expenditure Ratio 4% 3% 3% 3% 3% 3% 3.1% 2.9% 3.2% 2.9% 3.4% 2010 2011 2012 2013 2014* 14% 12% 10% 8% 6% 4% 2% 0% 2010 2011 2012 2013 2014* to Tax Revenue to Central Gov't Expenditure Notes: Using GDP at Current Market Prices [2010 Version] * Preliminary Figures 29
Risk Indicators Interest Rate Risk Exchange Rate Risk 20,3 26,1 25,9 18,8 22,5 23,2 16,2 16,0 20,9 20,5 14,8 14,5 46,2 45,1 44,4 46,7 43,3 46,5 11,3 10,4 10,2 11,7 10,7 12,3 2010 2011 2012 2013 2014*) Q3-2015 Variable rate ratio [%] Refixing rate [%] 2010 2011 2012 2013 2014*) FX Debt to GDP ratio (%) **) FX Debt to total debt ratio (%) Average Time To Maturity (ATM) - Years Debt Maturing in 1,3, and 5 years 9,70 9,60 9,74 9,60 34,2 34,6 32,4 33,4 33,9 33,9 9,46 20,8 22,7 21,5 21,8 20,2 20,6 9,32 7,1 8,2 7,2 8,6 7,7 7,5 2010 2011 2012 2013 2014*) Q3-2015 ATM (in years) 2010 2011 2012 2013 2014*) Q3-2015 in < 1 year (%) in < 3 year (%) in < 5 year (%) Notes: *)Preliminary Figures **)Using GDP at Current Market Prices [2010 Version] Risk indicators are improving amidst pressure from rupiah depreciation Risk indicators show improvements in interest rate risk and stability in exchange and refinancing risks 30
END OF PRESENTATION Directorate General of Budget Financing and Risk 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: 10710 Phone: +6221 3810175 Fax. : +6221 3846516 Website: www.djppr.kemenkeu.go.id
Domestic Institutional Investors 700 600 500 400 300 200 100 27.09% 241.7 24.01% 326.2 Insurance Company 552.3 24.11% 497.0 505.5 21.77% 20.71% 19.74% 356.5 361.4 12.79% 650.2 647.2 610.1 22.79% 22.86% 23.57% 30.00% 20.00% 10.00% 270 240 210 180 150 120 90 60 30 71.48 45% 110.13 37% 33% 142.97 Mutual Fund 244.32 220.24 180.28 159.00 28% 25% 25% 20% 235.79 20% 247.24 262.28 21% 22% 60% 50% 40% 30% 20% 10% 0 2008 2009 2010 2011 2012 2013 Mar-14 Dec-14 May-15 Oct-15 0.00% 0 0% Govt. Securities (GS) Bond Deposit Stock Mutual Funds Others Total Investment (in Trillion) % GS to Total Investment (RHS) Government Securities (GS) Deposit Bond Stock Others Total Investasi % SBN (RHS) Pension Fund 200 180 169.5 180.4 185.1 190.6 191.3 50% 45% 160 156.4 40% 140 141.5 136.5 35% 120 100 27.9% 90.1 108.4 27.4% 30% 25% 80 60 40 20 21.9% 22.6% 19.7% 18.4% 16.9% 20% 16.7% 16.5% 17.9% 15% 10% 5% 0 2008 2009 2010 2011 2012 2013 Dec-14 Feb-15 Jun-15 Oct-15 0% Source: Financial Service Authority (OJK), data processsed Govt. Securities (GS) Bond Deposit Stock Mutual Funds Others Total Investment (in Trillion) % GS to Total Investment (RHS) 32