The price of Indonesia SR007 closed at 100.7 yielding 7.87% yesterday, relatively unchanged from previous day trading. We the price of SR007 was moving steady ahead of new sukuk retail issuance namely SR008 next week. Prior to this new sukri offering, the old sukri series SR007 was seen actively traded after its yield touched a high 8.5% in early January. SR007 carries 8.25% in equivalent coupon rate, compared to its predecessor series SR006 and SR005 which offers 8.75% and 6% respectively.
We expects the newly series SR008 might be offered less than SR007 given the 3 year conventional bond (FR0069) yielding 7.87% yesterday, tightened by more than 60bps since mid January. SR007 was issued in February 2015 when the 3y tenor bond yielded 6.91%. For the record, government will start offering SR008 on 19 February to 4 March 2015, targeted to raise IDR 21.9trn.