Rating Upgrade, Government Bond Yield Falls to 6%

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23/06/2017 14:19 WIB

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Rating Upgrade, Government Bond Yield Falls to 6%

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Movement of Indonesian Government Bond Yields, December 30, 2016 - June 22, 2017

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The upgrade of Indonesia's sovereign debt rating to BBB- from BB+ has had a positive impact on the domestic bond market. After achieving investment grade status, the yield on 10-year government bonds immediately dropped to 6 percent from above 7 percent.

The benchmark 10-year government bond yield on June 22, 2017, stood at 6.829 percent, a decrease of 24.9 basis points (bps) following Standard & Poor's upgrade of Indonesia's debt rating on May 19. At that time, the government bond yield was still at 7.049 percent. Therefore, year-to-date (YTD), the SUN yield has decreased by 114.4 bps from its position at the end of 2016, which was 7.973 percent.

This decline in Indonesian government bond yields is the most significant compared to other Asian countries. According to Asiabondonline data, Hong Kong bond yields fell by 61.9 bps, Vietnam by 60.5 bps, followed by Singapore (49.1 bps), and then Malaysia (33.7 percent). Meanwhile, Chinese yields rose by 58 bps, Japanese yields by 1.2 bps, and Philippine yields by 0.3 bps.

"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."