Foreigners pull most money from Indonesian bonds in five years

[JAKARTA] Overseas investors pulled the most money from rupiah sovereign bonds in more than five years Thursday on speculation they were taking profits at the end of the fiscal year.

Foreign funds sold a net 9.63 trillion rupiah (S$989 million), the most since Jan 6, 2011, of government notes on March 31, according to the latest available data from the Indonesian Finance Ministry. That pared inflows this year to 36.51 trillion rupiah.

Indonesian sovereign debt has returned 8.7 per cent this year, the most in Asia, as the central bank cut its benchmark rate three times and inflation stayed within its 3 per cent to 5 per cent target range.

An 11 per cent advance in the rupiah over the past six months has also improved the allure of the nation's local-currency securities.

"Foreign investors were taking profits," said Ariawan, a fixed-income analyst at PT BNI Securities in Jakarta, who like many Indonesians goes by only one name.

"We still expect foreigners to have interest to enter the Indonesian bond market, especially on longer maturities" and local investors, particularly pensions funds and insurers, are still supportive, he said.

Indonesian 10-year notes rose for a fourth day as of 11.08 am in Jakarta, pushing the yield down two basis points to an 11-month low of 7.58 per cent , according to the Inter Dealer Market Association.

The two-year yield fell four basis points to 7.41 per cent, while the rupiah was steady at 13,158 a dollar.

BLOOMBERG