An auction for government sukuk broke a record in terms of incoming bids

News24xx.com - An auction for government sukuk on Tuesday broke a record in terms of incoming bids at Rp 40 trillion (US$2.82 billion), of which the government absorbed Rp 8 trillion.

“Usually, the incoming bids [in a sukuk auction] only reach about Rp 20 trillion,” said Bank Central Asia (BCA) economist David Sumual in Jakarta on Tuesday as quoted by kontan.co.id

The high interest of market players was attributed to positive sentiment toward the bond market over the weekend, including declining government debt paper yields. Indonesia Bond Pricing Agency data showed that the yield for debt papers with a 10-year tenor stood at 7.39 percent on Monday.

Meanwhile, Samuel Asset Management economist Lana Soelistianingsih said the higher sukuk coupon rate made the Islamic bond more attractive to investors.

”It is high time to play in the primary market. Sukuk is [more] attractive because of its limited supply,” Lana said.

According to the Finance Ministry’s Financing and Risk Management Directorate General,  short-tenor sukuk was more attractive during Tuesday’s auction. PBS021 series sukuk due to mature in 2021 received Rp 17.33 trillion in bids.

David said it was normal because investors had also considered global sentiment, which could affect the bond market. He explained that investing in short-term sukuk was safer. 

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