Demands for Long-term Bond Futures Increasing

TEMPO.CO, Jakarta - Long-term government futures are becoming more popular since long-term tenor yield is increasing, according to PT Trust Securities Research Head Reza Priyambada.

“Market makers chose long-term futures because the price increase is higher than the short-term fugures,” Reza told Tempo on Saturday, July 5, 2014.

Government’s bond futures FR0068 (20 year benchmark series) had increased by 133.26 basis points. The FR0070 price (10 year benchmark series) also increased by 66.75 basis points. While private bonds, such as PWON bonds from PT Pakuwon Jati gained positive responses after issuing US$168-million bonds and were oversubscribed 15 times.

Positive sentiments on macro-economic data, such as trade balance surplus at US$70 million and low inflation rate, also affected the bond market where both government and corporation bonds had positive movements. Reza explained that rupiah strengthening had positive impacts on the bond market, causing the electricity rate increase issue on July 1 to be temporarily disregarded.

“Our concern over decreasing bonds price was not proven. But we still have to look at sentiment changes ahead of the election. We’re hoping that no matter what the election result is, it would ease market’s concern,” Reza said.

AYU WANDARI