Indonesia - Indonesian Bonds Decline on Standard & Poor's Rating, Inflation.

Indonesia’s bonds fell, prompting 10-year yields to rise for a second day, after Standard & Poor’s kept a lower rating on the nation’s debt than counterparts and fuel-policy shifts added to inflation concern.    

S&P refrained from joining Moody’s Investors Service and Fitch Ratings in upgrading Indonesia to investment grade, citing “policy slippages” in a statement yesterday. The decision wasn’t expected by the central bank, Perry Warjiyo, director for economic and monetary policy research at the monetary authority, said yesterday. Bank Indonesia predicts consumer-price gains to reach 4.7 percent this year if sales of subsidized fuel are limited, compared with 3.97 percent in March, Warjiyo said. The rupiah was little changed.    

“Investors are now taking a wait-and-see approach on Indonesian assets,” said Artanavaro Gasali, the Jakarta-based head of global markets at PT Bank ICBC Indonesia. “The domestic concern is still inflation.”    

The yield on the government’s benchmark 10-year bonds climbed one basis point, or 0.01 percentage point, to 5.92 percent as of 9:09 a.m. in Jakarta, according to data compiled by Bloomberg.    

The government plans to prohibit vehicles with an engine size equal to or greater than 1,500 cubic centimeters from buying subsidized fuel starting in May, Evita Legowo, director general of oil and gas at the energy ministry, said April 23. Policy makers backtracked on plans to raise fuel prices last month.    

The rupiah traded at 9,196 per dollar, after closing at 9,192 on April 23, according to prices from local banks compiled by Bloomberg.    

One-month implied volatility, which measures exchange-rate swings used to price options, was unchanged at 6.5 percent for a fourth day.

BloombergIndonesian Bonds Decline on S&P Rating, Inflation; Rupiah Steady

Indonesia’s bonds fell, prompting 10-year yields to rise for a second day, after Standard & Poor’s kept a lower rating on the nation’s debt than counterparts and fuel-policy shifts added to inflation concern.    

S&P refrained from joining Moody’s Investors Service and Fitch Ratings in upgrading Indonesia to investment grade, citing “policy slippages” in a statement yesterday. The decision wasn’t expected by the central bank, Perry Warjiyo, director for economic and monetary policy research at the monetary authority, said yesterday. Bank Indonesia predicts consumer-price gains to reach 4.7 percent this year if sales of subsidized fuel are limited, compared with 3.97 percent in March, Warjiyo said. The rupiah was little changed.    

“Investors are now taking a wait-and-see approach on Indonesian assets,” said Artanavaro Gasali, the Jakarta-based head of global markets at PT Bank ICBC Indonesia. “The domestic concern is still inflation.”    

The yield on the government’s benchmark 10-year bonds climbed one basis point, or 0.01 percentage point, to 5.92 percent as of 9:09 a.m. in Jakarta, according to data compiled by Bloomberg.    

The government plans to prohibit vehicles with an engine size equal to or greater than 1,500 cubic centimeters from buying subsidized fuel starting in May, Evita Legowo, director general of oil and gas at the energy ministry, said April 23. Policy makers backtracked on plans to raise fuel prices last month.    

The rupiah traded at 9,196 per dollar, after closing at 9,192 on April 23, according to prices from local banks compiled by Bloomberg.    

One-month implied volatility, which measures exchange-rate swings used to price options, was unchanged at 6.5 percent for a fourth day.

Bloomberg

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