GOVERNMENT SECURITIES MANAGEMENT · Tenor 3yr FIX 5yr FIX 7yr FIX 10yr FIX 15yr FIX 20yr FIX Tranche Size JPY 75.7bn JPY 80.2bn JPY 4.5bn JPY 7.6bn JPY 4.0bn JPY 5.0bn Coupon 0.54%

GOVERNMENT SECURITIES

MANAGEMENTMAY 29, 2019

DIRECTORATE OF GOVERNMENT DEBT SECURITIESDIRECTORATE GENERAL OF BUDGET FINANCING AND RISK MANAGEMENTMINISTRY OF FINANCE OF THE REPUBLIC OF INDONESIA

DEBT FINANCING STRATEGY

Directorate of Government Debt SecuritiesDirectorate General of Budget Financing and Risk Management| Ministry of Finance of The Republic of Indonesia

Directorate of Government Debt Securities| Directorate General of Budget Financing and Risk Management| Ministry of Finance of The Republic of Indonesia

3

2019 FINANCING NEEDFulfilled from Government Securities IDR771.7 tn (92.5%) and Loan IDR62.24 tn (7.5%)

Financing need

IDR833.94 T

Budget Deficit

IDR296.0 T

Non-Debt Financing (nett)

IDR63.25 T

Investment Finaning

IDR75.9 T

Lending

IDR2.35 T

Other Financing

(IDR15.0 T)

Matured Debt

IDR474.68 T

GS

IDR382.74 T

80.63%

Loan

IDR91.94 T

19.37%

Financing Sources

IDR833.94 T

Domestic Debt

IDR653.66 T (78.38%)

Domestic GS

IDR651.70 T (78.15%)

Domestic Loan

IDR1.96 T (0.24%)

Foreign Denominated Debt

IDR180.28 T (21.62%)

Foreign Denominated

Bonds

IDR120.0 T (14.39%)

Foreign Loan

IDR60.28 T (7.23%)

2019 Matured T-Bills Issuance

IDR54.0 T

Gross GS

IDR825.70 T

GDS

70 – 75%

Sukuk

25 – 30%

Projection

2018 2019

29.78% 30.00%

(Through auction & non-auction)

Debt to GDP Ratio

Realization


GOVERNMENT SECURITIES INDICATIVE FINANCING PLAN FOR 2019

4

GS Net

[388.96]

GS Matured

[382.74]

GS Cash Management

[54.00]

GS Issuance Need

[825.70]

Issuance Composition

Domestic

[83% - 86%]

Auction

[74% – 76%]

Non-auction

[9% - 10%]

International

[14% - 17%]

• Auction:• Conventional Securities – 24x• Islamic Securities – 24x

• Non-auction:• Retail GDS (tradable/ORI & non-tradable), Retail

Sovereign Sukuk (tradable/Sukri & non-tradable);• Private Placement – based on request.

• Foreign denominated GS as complementary Avoidcrowding out in domestic market.

• The target amount can be adjusted to the potential ofother financing sources and financing needs.

GS Rupiah

ForeignDenominated GS

IDR trillion

• The issuance target for Semester I -2019 = 50% -60% of the gross target of GS;

• Especially for financing in IDR, issuance in Semester I = 52% of the IDR GS gross target.


43.4065%

0.000%

23.1935%

USD EURO JPY

195.4578%

45.2418%

4.302%

6.262%

Coupon GDS T-Bills

Private Placement Retail Bonds

251.2679%

66.5921%

IDR

FX

127.7781%

29.5219%

IDR

USD

GOVERNMENT SECURITIES FINANCING REALIZATION (a.o. May 29, 2019 - in Trillion IDR)

5

2019

Target Real. %

Government Securities Net 388.96 187.53 48.21%

Issuance Need 825.70 475.13 57.54%

GDS (conventional) 317.84

Sukuk 157.28

87.2568%

13.6411%

26.8821%

Auctions Private Placement Retail Sukuk

GOVERNMENT SECURITIES PERFORMANCE

Directorate of Government Debt SecuritiesDirectorate General of Budget Financing and Risk Management| Ministry of Finance of The Republic of Indonesia


GDS PRIMARY MARKET PERFORMANCETHROUGH ACTION

7

Average incoming bid in 2019 = IDR51.86 tn/auction while average awarded bid in 2019 = IDR21.88 tn/auction

[IDR Trillion]

Average

Incoming

Bid 2018 =

IDR42.38T/

auction

Average

Awarded

Bid 2018 =

IDR18.14T/

auction


GS PRIMARY MARKET PERFORMANCE 2018-2019THROUGH ACTION

8

[IDR Trillion]

Average incoming bid in 2019 = IDR36.03 tn/auction while average awarded bid in 2019 = IDR14.66 tn/auction

Average

Incoming

Bid 2018 =

IDR27.87T/

auction

Average

Awarded

Bid 2018 =

IDR12.15T/

auction


USD GLOBAL BONDS ISSUANCE

(PREFUNDING 2019)

Issuer Republic of Indonesia

Issuer Rating Baa2 Moody’s (Stable)BBB- S&P (Stable)BBB Fitch (Stable)

Exp. Issue Rating Baa2 Moody’s / BBB- S&P / BBB Fitch

Format U.S. SEC registered

Issue Senior unsecured fixed rate notes

Aggregate Size USD3,000 mm

Long 5-year Long 10-year Long 30-year

Maturity Feb 11, 2024 Feb 11, 2029 Feb 11, 2049

Tranche Size USD750 mm USD1,250 mm USD1,000 mm

Coupon 4.450% p.a.(30/360)

4.750% p.a.(30/360)

5.350% p.a.(30/360)

Reoffer Price 99.852 99.748 99.539

Reoffer Yield 4.480 % p.a. 4.780 % p.a. 5.380% p.a.

UST Benchmark (Yield)

2.875% 11/30/23(2.821%)

3.125% 11/15/28(2.972%)

3.000% 08/15/48(3.259%)

Spread +165.9 bp +180.8 bp +212.1 bp

Denominations USD200k/1k

Listing Singapore, Frankfurt Open Market

Law New York

Use of Proceeds For general purposes of the Republic of Indonesia, including to partially fund general financing requirements

Transaction Highlights:1. Navigated substantial volatility to successfully pre-fund 2019 budgetary requirements, capitalizing on what would be the only constructive market into which to execute its

transaction during the weeks available to Indonesia for a transaction prior to year-end.2. Successfully reset the Republic’s curve at the flattest level ever across 5Y, 10Y, and 30Y tenors, with less than 100 bp difference between 5Y and 30Y maturities3. High quality orderbook of over USD8.2 bn at pricing featuring notable sponsorship from high quality accounts and diversification into new pools of demand in the U.S.

Investor Breakdownby Investor Type

Investor Breakdown by Region

9%

29%

16%

55%

Asia Europe U.S. Indonesia

10%

34%

23%

43%

4%

38%

18%

44%

68%

7%

4%

19%

1%1%

75%

6%

7%

11%0% 1%

70%

4%

13%

10%≤1% 2%

Asset Manager / Fund Manager Bank Pension Fund / Insurance Sovereign Wealth Fund / Central Bank Private Bank Other

RI0124

RI0129

RI0149

RI0124

RI0129

RI0149

9

Directorate of Government Debt Securities| Directorate General of Budget Financing and Risk Management| Ministry of Finance of The Republic of Indonesia 10

Breakdown of Distribution by GeographyPricing Date: 12 February, 2019

Issuer: Perusahaan Penerbit SBSN Indonesia III

Obligor: The Government of Republic of Indonesia

Issuer Ratings: Baa2 (Moody’s) / BBB- (S&P) / BBB (Fitch)

Format and Instrument: 144A / Reg S Wakala Sukuk

Tenor: 5.5-years 10-years

Maturity Date: 20 August, 2024 20 February, 2029

Tranche Size: USD750mn USD1.25bn

Benchmark Yield: 2.493% 2.686%

Re-Offer Spread: CT5+140.7 bps CT10+176.4 bps

Profit Rate: 3.900% 4.450%

Periodic Distribution Rate: 3.900% 4.450%

Listing: NASDAQ Dubai, SGX-ST

Law: English / Indonesian Law

Joint Bookrunners: DB, DIB, HSBC, Mandiri, Maybank

Key Transaction Details

The Republic of Indonesia (“ROI”) successfully returned to the

US Dollar Sukuk market for the eighth time

Prior to the launch of the offering, ROI chose to reducepotential

time-to-market amidst the Chinese New Year Holiday first by

engaging the Middle Eastern and European investors first while

Asia was out

At the back-end of the roadshow, the Republic took advantage of

a conducive market backdrop to launch itsoffering

The transaction was announced with IPTs of 4.20% area and

4.70% area on the 5.5-year and 10-year tranches respectively

With a headline orderbook of >USD7.5bn, ROI was able to revise

guidance to 3.90 – 3.95% (WPIR) on the 5.5-year and 4.45 –

4.50% (WPIR) on the 10-year

The Republic eventually priced USD750mn 5.5-year Green Sukuk

and USD1.25bn 10-year Sukuk at tight end of final guidance

Transaction Highlights

5.5-year 10-year

Breakdown of Distribution by Investor Type

5.5-year 10-year

FM/AM

31%

Banks

23%

Ins/PF

17%

CBs/Official Institutions

21%

Others

8%

FM/AM

49%

Banks

32%

CBs/Official Institutions

3%

Ins/PF

7%

Others

9%

Indonesia

8%

ME/Islamic

30%Other Asia

15%

Europe

26%

US

21%

Indonesia

10%

ME/Islamic

29%

Other Asia

16%

Europe

22%

US

23%

REPUBLIC OF INDONESIA (Baa2 / BBB- / BBB)USD750mm 5.5-year Green Sukuk and USD1.25bn 10-year Sukuk


Issuer Republic of Indonesia

Issuer Ratings Baa2(Moody’s)/BBB-(S&P)/BBB(Fitch)/BBB(R&I)/BBB(JCR)

Format Samurai Bonds

Type of Notes Senior Unsecured

Bond Ratings Baa2（Moody’s）/ BBB-（S&P）/ BBB（Fitch）

Pricing Date May 16, 2019

Settlement Date May 22, 2019

Total Issue

AmountJPY 177.0bn

Tenor 3yr FIX 5yr FIX 7yr FIX 10yr FIX 15yr FIX 20yr FIX

Tranche Size JPY 75.7bn JPY 80.2bn JPY 4.5bn JPY 7.6bn JPY 4.0bn JPY 5.0bn

Coupon 0.54% 0.83% 0.96% 1.17% 1.55% 1.79%

Re–offer Spread YSO+52bp YSO+80bp YSO+88bp YSO+95bp YSO+120bp YSO+130bp

Key Notes

1. RoI’s demonstrated commitment to issue bonds in the Samurai market on an annual basis, the investors are impressed by the country’s consistent and multi-faceted progression,including holding the world’s largest democratic election.

2. RoI printed JPY177 billion size which marks this transaction as the largest ever Samurai bonds transaction by Asian Issuer.

3. RoI managed to issue 2 new tenors i.e. 15-year and 20-year bonds. These are the longest tenor bond outstanding by an Asian Issuer.

JPY177bn 6-tranche Samurai Bonds

Breakdown of Distribution by Investor Type

10-year

11


(%)

Average Daily TradingYields of Benchmark Series

Peers 10y Govt Bonds’ Yield

12

As of May 29, 2019

Foreign Ownership V. 10Y Yield Movement

LCY 10 Year Government Bonds (as of May 15, 2019)

Latest Yield

(%)

Prev Day Change

(in bps)

YTD Change (in

bps)

CN 3.25 0.0 ▼ 5.6

HK 1.59 0.0 ▼ 41.3

ID 7.96 0.0 ▼ 6.3

JP -0.12 0.0 ▼ 12.3

KR 1.66 ▲ 0.5 ▼ 30.1

MY 3.70 ▼1.3 ▼ 37.8

PH 5.22 ▼ 5.0 ▼ 184.8

SG 2.03 ▼ 0.5 ▼ 0.6

TH 2.23 ▲ 1.8 ▼ 25.1

Source: IBPA

SECONDARY MARKET PERFORMANCE

Source: Market Watch Asian Bond Online

As of May 29, 2019

10.67 12.19 14.49 16.74

19.79

20.81 16.88 15.41

0.69 0.92

1.31

3.53 1.48

2.78

2.60 4.38

17.73

20.80

21.59

25.95

17.46 17.82

26.81

21.29

-

20.00

40.00

60.00

2016 2017 2018 Jan-19 Feb-19 Mar-19 Apr-19 s.d 29 Mei-19

OUTRIGHT REPO NON BI REPO BI

As of June 7, 2019


(in trillion IDR)

1) Non Resident consists of Private Bank, Fund/Asset Manager, Securities Company, Insurance Company, and Pension Fund.

2) Others such as Securities Company, Corporation, and Foundation.

*) Including the Government Securities used in monetary operation with Bank Indonesia.

**) net, excluding Government Securities used in monetary operation with Banks.

OWNERSHIP OF TRADABLE DOMESTIC

GOVERNMENT SECURITIES

13

Description Dec-14 Dec-15 Dec-16 Dec-17 Dec-18 29 May 19

Banks* 375.55 31.04% 350.07 23.95% 399.46 22.53% 491.61 23.41% 481.33 20.32% 492.35 19.68%

Govt Institutions

(Bank Indonesia**)41.63 3.44% 148.91 10.19% 134.25 7.57% 141.83 6.75% 253.47 10.70% 260.52 10.42%

Bank Indonesia (gross) 157.88 8.90% 179.84 8.56% 217.36 9.18% 232.70 9.30%

GS used for Monetary

Operation 23.63 1.33% 38.01 1.81% (36.11) -1.52% -27.82 -1.11%

Non-Banks 792.78 65.52% 962.86 65.87% 1,239.57 69.90% 1,466.33 69.83% 1,633.65 68.98% 1,748.40 69.90%

Mutual Funds 45.79 3.78% 61.60 4.21% 85.66 4.83% 104.00 4.95% 118.63 5.01% 106.95 4.28%

Insurance Company

and Pension Fund193.90 16.03% 221.45 15.15% 325.52 18.36% 348.86 16.61% 414.47 17.50% 448.70 17.94%

Foreign Holders 461.35 38.13% 558.52 38.21% 665.81 37.55% 836.15 39.82% 893.25 37.71% 949.26 37.95%

Foreign Govt's &

Central Banks103.42 8.55% 110.32 7.55% 120.84 6.81% 146.88 6.99% 163.76 6.91% 160,01 6.40%

Individual 30.41 2.51% 42.53 2.91% 57.75 3.26% 59.84 2.85% 73.07 3.09% 84.08 3.36%

Others 60.51 5.00% 78.50 5.37% 104.84 5.91% 117.48 5.60% 134.22 5.67% 159.42 6.37%

Total 1,209.96 100% 1,461.85 100% 1,773.28 100% 2,099.77 100% 2,368.45 100% 2,501.28 100%


Monthly Net Buyer (Seller) - Non Resident Foreign Ownership - Proportion by Tenor

[In Trillion IDR ]

FOREIGN INVESTORS MOSTLY DOMINATED BY HIGH QUALITY LONG TERM INVESTORS

14

As of May 29, 2019

FOREIGN INVESTOR ACTIVITY


SOLID POLICY COORDINATION IN MANAGING FINANCIAL MARKETS VOLATILITY

First Line of Defense

State’s Budget

Buyback fund at DG of Budget Financing

and Risk Management

Investment fund at Public Service Agency

(BLU) (min. level Aware)

State Owned Enterprises

(BUMN)’s Budget Related SOEs (min. level Aware)

Social Security Organizing

Agency (BPJS)’s BudgetBPJS (min. level Aware)

Second Line of Defense

State’s Budget

State General Treasury Account (Rekening

KUN) (min. level Alert)

Accumulated cash surplus (SAL) (min. Level

Crisis)

Gov’t Securities Crisis Management Protocol (CMP)

Indicators:

- Yield of benchmark series;

- Exchange rate;

- Jakarta Composite Index;

- Foreign ownership in government securities

Policies to address the crisis at every level :

- Repurchase the government securities at secondary market

- Postpone or stop the issuance

The enactment of Law No. 9/2016 regarding Prevention

and Mitigation of Financial System Crises as a legal

foundation for the government to serves at the time of

financial crisis in the form of Financial System Stability

Committee (KSSK)

Specific policies in place to address crises enacted in 2018Budget Law (Law No. 15/2017, article 25):

• Govt (with legislative approval) could utilize Accummulated Cash Surplus (SAL) for stabilizing market

• Legislative approval should be received within 24 hr after Govt proposed

Bond Stabilization Framework

Swap facility arrangements based on international

cooperation

Enhancing coordination between government institutions

and continuous dialogue with market participants

Implementing Crisis Management Protocol (CMP)

Implementing Bond Stabilization Framework (BSF)

CMP

BSF15

Directorate of Government Debt SecuritiesDirectorate General of Budget Financing and Risk Management

Ministry of Finance of The Republic of Indonesia

Frans Seda building, 4th FloorJl. Wahidin Raya No. 1, Jakarta Pusat – Postal Code: 10710

Phone: +6221 3810175Fax. : +6221 3846516

Website: www.djppr.kemenkeu.go.idEmail: [email protected]

END OF PRESENTATION

http://www.djppr.kemenkeu.go.id/

mailto:[email protected]

Documents

GOVERNMENT SECURITIES MANAGEMENT · Tenor 3yr FIX 5yr FIX 7yr FIX 10yr FIX 15yr FIX 20yr FIX Tranche Size JPY 75.7bn JPY 80.2bn JPY 4.5bn JPY 7.6bn JPY 4.0bn JPY 5.0bn Coupon 0.54%