Indonesia's Rating Upgrade, Samurai Bond Yields Fall

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02/06/2017 06:47 WIB

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Indonesian Government SUN Coupon in Japanese Yen 2015-2017

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Indonesia's upgrade to investment grade by international rating agency Standard & Poor's Global, raising its foreign currency debt rating to BBB-, has made government bond issuance cheaper. This is evident in the coupon rate of the Government of Indonesia's (SUN) Samurai Bonds (yen-denominated bonds) issued on May 31, 2017.

Last weekend, the government successfully issued ¥100 billion worth of Samurai Bonds. This comprised three series: RIJPY0620, a 3-year bond worth US$40 billion with a coupon rate of 0.65%, lower than the 0.83% rate in 2016; RIJPY0622, a 5-year bond worth US$50 billion with a coupon rate of 0.89%, lower than the 1.16% rate in 2016; and RIJPY0624, a 7-year bond worth US$10 billion with a coupon rate of 1.04%, the first 7-year Samurai Bond issued by Indonesia. According to Asiabondonline, the yield on 10-year Japanese government bonds is only 0.049%. This means that despite the lower coupon rates on the Indonesian Samurai Bonds, they remain attractive compared to Japanese government bonds.

"Disclosure: This is an AI-generated translation of the original article. We strive for accuracy, but please note that automated translations may contain errors or slight inconsistencies."