Company Update

27 April 2022

Fixed Income Report April 27, 2022

Global Market Update
• US government bond yields fell on Tuesday (04./26/22). UST yields dropped 2- 9 bps along the curve.
• The benchmark 10-year UST yield fell 10 bps to 2.72% after previously hitting a 3 year highs level.
• US equity experienced a sharp decline. DJI dropped 2.38%; S&P 500 fell 2.81% and Nasdaq Composite lost 3.95%.
• Investors focus remain on 3 things : 1) inflation and monetary policy; 2) Russia- Ukraine war development and Covid-19.
• The Fed is expected to increase benchmark policy rate by 50 bps anytime soon.
• While on the war development, the conflict keeps continue and US is reported to pledge USD700mn financing to help Ukraine.
• Now the epicenter of Covid-19 outbreak is back to China. The breakout in Beijing has worried investors about potentially slower economic growth due to China’s zero Covid-19 policy.

Domestic Market Update
• Yield on 10-year Indo GB fell 4 bps and was closed at 6.98% on Tuesday (04/26/22).
• The IDR strengthened against USD to IDR 14.411/USD yesterday (vs IDR14,454/USD in the previous day).
• Risk premium which is reflected by the 5-year Indo CDS was closed at 98.86 bps.
• The government asserts that it only bans export on palm oil derivative products that are used as raw materials for cooking oil (HS: 15119036, 15119037, and 15119039) and CPO is still allowed to be exported.
• After considering a more clear policy from government regarding to palm oil export ban, we estimate that Indonesia's export value is likely to decrease by USD 0.85-1.12 billion per month.

Market Projection
• Given the recent development on global and domestic market, we expect the 10 year Indo GB yield to keep steady within a range of 6.95-7.05% for today.
• Attractive Indo GB series to be traded today : FR0070, FR0086, FR0090, FR0078, FR0052, FR0087, FR0091.

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