Indonesian bonds back on menu as Asia high-yielders lure inflows

A ticker displays stock prices inside the Indonesia Stock Exchange (IDX) in Jakarta. (Bloomberg pic)

JAKARTA: Indonesian debt is closing in on its best month in three years as Asia’s high-yielders move back onto investors’ radar.

Rupiah bonds are among the region’s best performers in November as global funds resume their search for yield in a buying spree that’s also lifted Indian and Philippine securities.

A slew of measures from Indonesian policy makers and stabilisation in emerging-market sentiment have helped fuel the gains.

“We are probably past the peak pain for Indonesian government bonds.

“There are still headwinds rising from trade tensions and Fed hikes, but with real rates high and nothing fundamentally wrong with the economy, inflows have returned,” said Eugene Leow, a fixed-income strategist at DBS Group Holdings Ltd in Singapore.

Demand for high-yielding Asian currencies is reviving after a tumultuous year as money managers get used to an environment of a stronger dollar and an ongoing trade war.

The recent collapse in oil prices has burnished the appeal of assets in nations with budget deficits, with foreigners buying almost US$3 billion (RM12.58 billion) worth of Indonesian and Indian bonds in November.

“Investors are comforted by the prudent measures and fiscal sustainability of Indonesia,” said Trinh Nguyen, a senior economist at Natixis Asia Ltd in Hong Kong.

“The government was very clear that it prioritizes rupiah stability and matched words with actions. Investors will be comforted by that.”

Indonesia’s 10-year yield dropped almost 70 basis points this month to 7.88%, with Goldman Sachs Group Inc recommending that investors buy the debt.

The currency has advanced more than 4%.