New retail sukuk will be issued soon

JAKARTA. The government will release retail sukuk series SR-009 on February 4 until March 2, 2017. The newest note is predicted to offer yields of more than 7%.

Fixed Income Fund Manager of Ashmore Asset Management Indonesia Anil Kumar estimates that the retail sukuk remains attractive for the investors, as long as the sukuk offers high yields.

As comparison, the previous series of ORI-013 with the coupon of 6.6% was less attractive. In order to attract more investors, the government is suggested to offer the coupon at the range of 7.1%-7.3%. Ainil predicts, the government can attract the investors to invest in retail sukuk by increasing the coupon by 20 bps-40 bps.

Fixed Income Analyst of MNC Securities I Made Adi Saputra predicts that the government would offer the yields at 7.25% -7.5% for the new retail sukuk. "The retail sukuk coupon is more attractive than deposits’ rate, which is only 6%,” said Made.

As information, the coupon of the new retail sukuk would be lower than the previous series of SR-008’s coupon at 8.3%. The lower coupon is in line with the decrease in BI or the Central Bank’s interest rate. Currently, BI’s interest rate stands at the level of 4.75%.

Made estimates, the new retail sukuk will be more prestigious in the secondary market than the previous series, namely SR-008. Last year, SR-008 was the most actively traded government bonds with 27,695 times transactions and the total volume of Rp 82.79 trillion.

Senior Research & Investment Analyst Infovesta Utama Wawan Hendrayana estimates, retail sukuk would be more attractive compared with ORI (Indonesia’s Retail Bond) and deposits, since the retail sukuk would be offered in a limited number. He predicts that retail sukuk will offer coupon at 7%-8%.

Investors’ demands

In 2016, the issuance of SR-008 amounted to Rp 31.5 trillion or exceeded the indicative target of Rp 30 trillion. Made predicts that the demands of the new retail sukuk will amount to Rp 25 trillion-Rp 30 trillion. Despite of the lower demands compared with the last year, this number would be higher than the government’s target of this year that amounts to Rp 20 trillion.

This year, the government will issue two retail bonds, namely ORI and retail sukuk. The two bonds are expected to generate a total of Rp 40 trillion funds.

Meanwhile, Wawan predicts that the government will absorb about Rp 21 trillion-Rp 22 trillion from the new retail sukuk. “I am optimistic that it would be more than Rp 20 trillion, as the market is ready,” he said. (Muhammad Farid/Translator)