Local Debt Yields Higher On Prabowo Plans To Increase Debt-To-GDP

The INDON sov curve has moved tighter today, while USD to IDR debt spread has widened with local currency debt moving 5-12bps wider on headlines out earlier around President elect looking to increase the Debt-To-GDP ratio towards 50%.

• The INDON curve has seen better buying through the belly of the curve today, with the 3-7yr part of the curve about 4bps lower. The 2Y yield is -2bp at 5.25%, 5Y yield is -3.5bps at 4.965%, the 10Y yield is -3bp at 5.05%, while the 5-year CDS is 0.5bp higher at 72bps.
• Local debt yields have continued to sell off plans to increase debt over the coming years, currently the 5yr is trading 12bps higher at 7.04%
• The INDON to UST spread diff the 2Y is now 54.5bps (+4bp), 5yr is 70.5bps (+2bp), while the 10yr is 79bps (+4bp).
• In cross-asset moves: USD/IDR is up 0.50%, last near 16360 and now back of 2020 levels, the JCI is down -0.62%. US Tsys futures are a touch lower today, while yields are 1-3bps higher.
• Indonesia's President-elect Prabowo Subianto plans to gradually increase the country's debt-to-GDP ratio by 2 percentage points annually, aiming for a 50% ratio by the end of his term to fund welfare programs and infrastructure, while maintaining investor confidence through fiscal prudence. This approach marks a shift from Indonesia's traditionally conservative fiscal policy, yet aims to keep debt levels below those of regional neighbors Malaysia, Thailand, and Singapore.
• Looking ahead: There is little on the local data calendar until Trade Balance data on Wednesday