Indonesia raises 7.5 trillion rupiah in debt auction, yields fall

Indonesia sold 7.5 trillion rupiah ($880 million) of debt in an auction on Tuesday, seeing strong demand for both short and long tenors that pushed yields down steeply. Indonesia's finance ministry sold 1.4 trillion rupiah of three-month T-bills yielding 4.63 percent, and 1.3 trillion rupiah of one-year T-bills yielding 5.21 percent.
This compared to yields of 5.44 percent and 5.68 percent in last month's auction. Yields on 30-year bonds also slipped to 9.12 percent, from 9.33 percent in the previous auction, as foreign and local investors resumed buying after inflation slowed to a one-year low of 5.54 percent in June.
In June, foreigners bought a net 9.67 trillion rupiah of Indonesian government bonds, more than double their net purchases in May, taking foreign ownership to a near record 34 percent of total outstanding bonds. "Demand has returned and it is more focused on short tenors," said Destry Damayanti, an economist at Bank Mandiri, adding this was because of fears inflationary pressures could pick up again.
The auction sales were slightly above the government's target of raising 7 trillion rupiah. It aims to raise 45.5 trillion rupiah of debt in the third quarter, after raising 54 percent of its gross issuance target of 210.6 trillion rupiah in the first half of this year. The finance ministry sold 80.3 trillion rupiah of debt through auctions in the first half, and analysts say it could cut debt issuance later in the year if low government spending and higher-than-targeted borrowing leave the government with too much cash.