Trade Plan: Seize opportunities in Indonesian and Philippine sovereign bonds
You can maximize Indonesia’s 10-year and 30-year sovereign bonds along with Philippine 5.5-year and 10.5-year bonds.
If you are looking for opportunities in sovereign bonds, you can say “Terimah kasi” and “Maraming salamat”.
That is because of the recent announcement of the dual-tranche bond issuance of Indonesia, Southeast Asia’s largest economy, which is set to issue new US dollar-denominated bonds in 10-year and 30-year tenors. This move comes after a similar issuance by the Republic of the Philippines (ROP) last week.
But why should you, a high-net-worth investor, care about these bonds?
The Indonesian bonds (INDONs) offer a potentially attractive yield where finding meaningful returns can already be challenging as markets anticipate lower interest rates. The initial price guidance for the 10-year bond is 5.150%, while the 30-year bond is around 5.500%. However, our analysts expect these yields to potentially decrease by 25-30 basis points during the final pricing. Still, these rates provide a compelling opportunity to enhance your portfolio’s yield for a much longer period.
Our trading desk recommends placing limit orders at 4.900% or better for the 10-year bond, and 5.250% or better for the 30-year bond.
The issuance of these Indonesian bonds is also expected to create a temporary widening in credit spreads for other regional bonds. This presents an excellent opportunity to pick up some Philippine bonds, particularly the new 5.5-year and 10.5-year Republic of the Philippines bonds, at attractive levels.
Why consider Philippine bonds alongside Indonesian ones?
You can download our report here to know more.
Please get in touch with your relationship manager or investment specialist for assistance, too.