HALISTER1: Indonesian Bonds Set to Rebound From Oversold Conditions: CIMB

Indonesian Bonds Set to Rebound From Oversold Conditions: CIMB

(Bloomberg) -- Indonesia’s 10-year yield is likely to decline to 6.50 percent as the debt is oversold and the economy’s fundamentals are improving, says Ray Choy, head treasury strategist at CIMB Bank in Kuala Lumpur.
  • Indonesian notes offer attractive carry, which would lure longer-term money
  • 10-year yield is appealing given its above- average spread against short end
  • Expects USD/IDR to drop to 13,500 by year-end and reach 13,300 by end-March
  • Rupiah to be supported as BI has damped speculation it’ll embark on a rate- cut cycle
  • “Furthermore, inflation used to be a perennial problem in Indonesia and policy credibility has been demonstrated through declining inflation, amidst Indonesia’s full investment grade rating,” says Choy
  • NOTE: The yield on Indonesia’s bond due May 2027 jumped 27bps to 6.81% in October
  • NOTE: USD/IDR gained 0.7% this month to 13,567
To contact the reporter on this story: Liau Y-Sing in Kuala Lumpur at yliau@bloomberg.net To contact the editors responsible for this story: Tan Hwee Ann at hatan@bloomberg.net Patricia Lui

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Source: BFW (Bloomberg First Word)

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Ray Choy (CIMB Group Holdings Bhd)

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