DAILY

20 January 2012
INVESTMENT RESEARCH REPORT

Daybreak
Rupiah Bond Market Commentaries

Whats on the table Thursday, 19 January 2012

Highlights of the Day

Activities improved along the government bond market with total volume standing at Rp5.89 trillion compared with Rp1.96 trillion the day before. Better buyers dominated the session, following the stronger Rupiah which rose 30 pips to 9,030, as well as gains along Indonesian stocks (+0.58% to 4,001.07). Hefty volume was found along selected govvies, notably FR53 and FR59. Looking at the medium tenured segment, the FR5321 (Rp567 billion) received buying interest. It was closed at 45 cents higher to a realigned 114.75/6.21%. Corporate bonds recouped some of their losses. Unfortunately, activities were more sluggish than in the previous trading day, down 39% to Rp181.2 billion (vs. Rp297.8 billion prior). The funds flow was pondered onto A rated names, especially on Bank Mega. Elsewhere, AA+ Adira Finance, AA+ PLN, and AA- Bank Jabar Banten appeared to be lifted compared to the previous last transactions. Decent appetite flew to AA+ Adira Finance IVA12 (Rp10 billion) as the bond gained 37 cents to 100.34/6.94%, whereas AA+ BCA Finance IIIC13 (Rp15 billion) climbed 56 cents to 103.75/7.66%.

Morning Thoughts
Indonesia has replaced Thailand as ASEAN`s biggest market for autos. Car sales in Indonesia reached 890,410 units in 2011 whilst Thailands number is projected to be restrained with total industrial volume of 800,300 units in 2011. The Association of Indonesian Motor Vehicles Industry (Gaikindo) also said that Indonesian car sales in 2011 had exceeded Thailand`s with Indonesia`s car sales reaching more than 894k units in 2011. The increase in car sales in 2011 was not caused by the floods in Thailand. Even without the effects of the floods in Thailand, Indonesia`s car sales are still high. The sales are already higher than Thailand`s in July last year.

Please read carefully the important disclosures at the end of this publication.

INDONESIA

Sovereign Bonds
Activities improved along the government bond market with total volume standing at Rp5.89 trillion compared with Rp1.96 trillion the day before. Better buyers dominated the session, following the stronger Rupiah which rose 30 pips to 9,030, as well as gains along Indonesian stocks (+0.58% to 4,001.07). Hefty volume was found along selected govvies, notably FR53 and FR59. Looking at the medium tenured segment, the FR5321 (Rp567 billion) received buying interest. It was closed at 45 cents higher to a realigned 114.75/6.21%. Along the back-end of the government yield curve, FR4322 and FR5927 posted traded volume of Rp117 billion and Rp513 billion. The papers saw better buyers which were last transacted at 127.25/6.66% and 102.80/6.71%, respectively. Furthermore, top active bonds FR5626 (Rp731 billion) and FR5431 (Rp2.1 trillion) were up 150 cents and 37 cents to 112.00/7.06% and 125.77/7.06%.

Corporate Bonds
Corporate bonds recouped some of their losses. Unfortunately, activities were more sluggish than in the previous trading day, down 39% to Rp181.2 billion (vs. Rp297.8 billion prior). The funds flow was pondered onto A rated names, especially on Bank Mega. Elsewhere, AA+ Adira Finance, AA+ PLN, and AA- Bank Jabar Banten appeared to be lifted compared to the previous last transactions. Decent appetite flew to AA+ Adira Finance IVA12 (Rp10 billion) as the bond gained 37 cents to 100.34/6.94%, whereas AA+ BCA Finance IIIC13 (Rp15 billion) climbed 56 cents to 103.75/7.66%. However, AA BII Sub I18 (Rp12 billion) was traded flat at 103.35/10.05%. Players decided to take profit on AA- Panin Bank Sub III17 (Rp17 billion), which was given 60 cents lower to 100.80/10.32%. Traders seemed to switch out of A rated Bank Mega Sub I18 (Rp100 billion), which retreated 189 cents to 99.52/11.61%, whilst A Bank Sulselbar IA14 (Rp10 billion) surged 125 cents to 101.25/8.95%.

CIMB IDR Fixed Income Research Team +62 (21) 250 5151
Ramdhani Pratama Putra Analyst

Traded Sovereign Bonds Reported Trans. No Bond ID Maturity Type 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 SR001 ORI004 GBRB0018NvBF ORI006 FR0023 SR002 GBRB0019NvBF ORI007 ORI007 ORI005 GBRB0020NvBF SR003 FR0026 FR0027 FR0030 FR0055 FR0060 FR0038 FR0036 FR0031 FR0034 FR0053 FR0061 FR0043 FR0046 FR0039 FR0044 IFR0007 FR0040 FR0037 FR0056 FR0059 FR0042 FR0047 IFR0006 FR0052 FR0054 FR0058 IFR0010 FR0045 FR0050 FR0057 GBRB0021NvBV GBRB0029NvBV Outright Outright Outright Outright Outright Outright Outright Others Outright Outright Outright Outright Outright Outright Outright Outright Outright Outright Outright Outright Outright Outright Outright Outright Outright Outright Outright Outright Outright Outright Outright Outright Outright Outright Outright Outright Outright Outright Outright Outright Outright Outright Outright Outright 25-Feb-12 12-Mar-12 15-Jul-12 15-Aug-12 15-Dec-12 10-Feb-13 15-Jun-13 15-Aug-13 15-Aug-13 15-Sep-13 15-Dec-13 23-Feb-14 15-Oct-14 15-Jun-15 15-May-16 15-Sep-16 15-Apr-17 15-Aug-18 15-Sep-19 15-Nov-20 15-Jun-21 15-Jul-21 15-May-22 15-Jul-22 15-Jul-23 15-Aug-23 15-Sep-24 15-Jan-25 15-Sep-25 15-Sep-26 15-Sep-26 15-May-27 15-Jul-27 15-Feb-28 15-Mar-30 15-Aug-30 15-Jul-31 15-Jun-32 15-Feb-36 15-May-37 15-Jul-38 15-May-41 25-Nov-15 25-Aug-19

High 101.81 102.25 106.35 103.25 106.75 103.00 113.75 100.00 103.45 109.00 117.60 104.25 114.60 112.50 120.00 107.00 102.50 130.00 133.30 132.50 146.00 115.00 108.50 127.25 122.00 139.75 126.25 121.30 137.00 145.75 114.75 105.75 130.75 130.00 125.85 135.25 128.75 114.50 125.20 128.75 138.00 128.00 98.30 100.02

Low 99.75 100.00 105.65 100.50 106.00 102.20 113.75 100.00 100.75 105.50 117.50 100.00 113.50 112.14 119.75 106.25 102.50 128.75 132.75 132.50 145.50 109.44 105.75 127.25 122.00 139.75 126.25 120.50 133.00 145.25 111.25 100.00 127.00 123.00 125.65 131.50 119.00 111.50 125.00 126.25 137.00 125.13 98.30 100.02

Last 101.81 101.60 106.35 102.00 106.40 103.00 113.75 100.00 103.50 109.00 117.60 100.25 114.50 112.50 119.77 107.00 102.50 130.00 133.25 132.50 146.00 114.75 105.75 127.25 122.00 139.75 126.25 121.30 137.00 145.72 112.00 102.80 130.20 124.00 125.85 135.25 125.77 114.50 125.05 128.75 138.00 127.50 98.30 100.02

TTM (yrs) 0.4 0.4 0.8 0.8 1.2 1.3 1.7 1.8 1.8 1.9 2.2 2.4 3.0 3.7 4.6 4.9 5.5 6.8 7.9 9.1 9.7 9.8 10.6 10.8 11.8 11.9 12.9 13.3 13.9 14.9 14.9 15.6 15.8 16.4 18.4 18.9 19.8 20.7 24.4 25.6 26.8 29.6 4.1 7.9

Yield (%) 6.68% 5.40% 4.33% 6.79% 5.21% 6.27% 5.44% NM 5.89% NM 5.50% 7.93% 5.67% 5.66% 5.76% 5.70% 5.71% 6.15% 6.01% 6.25% 6.35% 6.21% 6.25% 6.66% 6.75% 6.80% 6.90% 7.66% 6.83% 7.01% 7.06% 6.71% 7.04% 7.44% 7.61% 7.08% 7.06% 6.92% 7.70% 7.26% 7.26% 7.23% 4.20% 3.75%

Freq (x) 7 18 2 15 3 6 1 2 11 3 3 8 3 5 4 3 1 2 9 1 10 15 7 2 1 1 1 3 3 4 29 36 4 7 5 3 44 3 3 5 5 13 1 1 313

Volume (Rpbn) 1.2 547.3 12.7 47.8 7.7 10.5 5.0 0.2 6.1 0.2 11.1 3.5 54.8 28.7 40.0 11.0 20.0 6.3 185.8 5.0 45.6 566.8 6.4 117.3 35.9 4.1 1.4 13.0 5.1 64.0 730.6 512.9 8.6 7.0 25.0 100.6 2,139.6 1.6 30.0 190.0 70.0 125.0 45.0 44.0 5,894.2

Source: IDX

Traded Corporate Bonds Reported Trans. No Bond ID Rating Type 1 2 3 4 5 6 7 8 9 10 11 12 ADMF04A PPLN12B BCAF03C BCAF04A BCAF04C NISP02 BNII01SB PNBN04SB BJBR07B BSSB01A BFIN04A MEGA01 idAA+ idAA+ idAA+ idAA+ idAA+ idAA idAA idAAidAAidA A(idn) A(idn) Outright Outright Outright Outright Outright Outright Outright Outright Outright Outright Outright Outright

Maturity 29-Apr-12 8-Jul-22 23-Mar-13 26-Jun-12 22-Jun-13 11-Mar-18 19-May-18 9-Nov-17 9-Feb-16 12-May-14 12-Jul-12 15-Jan-18

High 100.34 108.55 103.75 100.00 101.25 100.00 103.35 101.60 103.60 101.25 100.33 101.46

Low 100.20 108.55 103.45 100.00 101.25 100.00 103.11 100.80 102.80 101.10 100.30 99.50

Last 100.34 108.55 103.75 100.00 101.25 100.00 103.35 100.80 102.80 101.25 100.33 99.52

TTM (yrs) 0.55 10.74 1.44 0.70 1.69 6.41 6.60 6.08 4.33 2.58 0.75 6.26

Yield (%) 6.94 9.14 7.66 7.89 7.90 NM 10.05 10.32 9.40 8.95 8.53 11.61

Freq (x) 2 1 3 1 1 1 2 5 2 2 2 8 30

Volume (Rpbn) 10.0 5.0 15.0 3.0 1.7 1.5 12.0 17.0 4.0 10.0 2.0 100.0 181.2

Source: IDX

Whats in the News Economic News

Indonesia becomes biggest automotive market in ASEAN Indonesia has replaced Thailand as ASEAN`s biggest automotive market with car sales reaching 890,410 units in 2011. Thailand has been projected to restrain with a total industrial volume of 800,300 units from year to year in 2011," Vice President of Automotive Practice at the research company Frost & Sullivan Asia Pasifik, Vivek Vaidya, said. First Chairman of the Association of Indonesian Motor Vehicles Industry (Gaikindo) Jongkie D Sugiarto also said that Indonesia`s car sales in 2011 had exceeded Thailand`s. Jongkie said Indonesia`s car sales last year reached more than 894,000 units. The increase in Indonesia`s car sales in 2011, Vaidya said, was not caused by the floods in Thailand. Even without the effects of the floods in Thailand, Indonesia`s car sales are still high. The sales are already higher than Thailand`s in July last year. He projected that Indonesia would still become the biggest automotive market in ASEAN. (Bloomberg) Brown Brothers Solot Sees More Credit Upgrades for Indonesia Ilan Solot, an emerging-markets currency strategist in London at Brown Brothers Harriman, comments on the increase of Indonesias foreign- and local-currency rating by Moodys Investors Service yesterday to Baa3, the lowest investment grade. According to our internal sovereign rating model, Indonesia is seen as an A-/A3/A- credit versus actual ratings of BB+/Baa3/BBB-. Thats not to say that we expect an A rating soon, but the agencies are clearly underrating Indonesia and the path for further upgrades is clear. With Fitch and Moodys now at investment grade, it is only a matter of time before S&P upgrades to BBB-. The events in recent days may mark the end of the Indonesian rupiahs recent underperformance against its regional peers. The supportive developments include a credit rating upgrade, the successful 30-year dollar bond issuance, the decision by the Bank of Indonesia to widen the corridor of the interbank lending rate (instead of cutting rates), and further confirmation that outflows from the local bond market have stabilized. (Bloomberg) Indonesia Wins Second Rating Upgrade in Month, Aiding Investment Indonesia won its second credit rating upgrade in five weeks as Moodys Investors Service returned the country to investment level for the first time since the Asian financial crisis. The foreign- and local-currency rating was increased to Baa3 from Ba1, Moodys said in a statement yesterday. The outlook is stable. The upgrade brings Southeast Asias largest economy to the lowest investment grade, the same level as India. Emerging-market economies from Brazil to Turkey and the Philippines are winning rating upgrades as governments take steps to contain budget deficits and bolster growth, even as Europes debt crisis prompted Standard & Poors to cut the credit ratings of nine members of the 17-nation euro area on Jan. 13. Yesterdays decision may aid President Susilo Bambang Yudhoyonos efforts to spur expansion by boosting investment. (Bloomberg) RI bank interest rates on deposits highest in ASEAN : BI Indonesian bank interest rates on deposits or savings are at the highest level in the ASEAN region and need to be reviewed to improve the banking industry`s efficiency, the country`s central bank chief said. The main factors in the high lending rate in Indonesia is the high level of interest rates on deposits as well as overhead costs," said Bank Indonesia (BI) Governor Darmin Nasution. Darmin said the interest rate on deposits in Indonesia was higher than in other ASEAN countries such as Malaysia, Thailand and the Philippines. Malaysian and Thai banks are more efficient. When we compare efficiency in Indonesia and in the Philippines, we will see the situations are almost similar. Interest on deposits in the Philippines is 3 percent but inflation is 4.5 percent," he said. armin said the Indonesian government, the finance ministry, state-owned enterprises and private companies should have more investment instruments for interest on deposits to be lower than the inflation rate. (Bloomberg)

Indonesia Food and Drink Report Q1 2012: Strong Showing in Retail and Consumer Confidence Indonesian GDP growth came in at a strong 6.5% year-on-year (y-o-y) in Q211 for a third straight quarter, marking the economy's continued domestic demand-driven resilience in the face of mounting external pressures. BMI continues to like Indonesia as a regional outperformer, with countries more dependent on external trade, such as Singapore, feeling the effect of a protracted slowdown in exports. The Indonesian consumer remains in good shape, and this is borne out in a strong showing in retail and consumer confidence. Looking over the long term, robust macroeconomic fundamentals, an enticing demographic profile and the spread of organised retail underpin a highly dynamic consumer growth story in Indonesia. Business Monitor International's Indonesia Food and Drink Report provides industry professionals and strategists, corporate analysts, food and drink associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Indonesia's food and drink industry. Catching The Sights Of Multinational Retailers Indonesia's potential has clearly attracted the sights of multinational retailers. South Korean retailer Lotte Department Store plans to launch five new outlets in several cities in Indonesia by 2018. Meanwhile, Germany-based grocery store operator Metro Group has revealed plans to launch its first cash-and-carry outlet in Indonesia by 2012. Indonesia Featuring Strongly On Food Companies' Radars Anglo-Dutch consumer goods group Unilever is set to make a EUR550mn (US$750mn) investment in its Indonesian operations in a bid to expand its business footprint in the country. Meanwhile, Swiss food group Nestl has started building a US$200mn factory in Karawang, Indonesia, to manufacture infant cereals, chocolate malt drinks and milk powder. (Bloomberg) Bank Indonesia is considering to buy long-term state securities Bank Indonesia is considering to buy long-term securities in an effort to increase efficiency in the banking industry and reduce borrowing interests. "We have intervened since September to make the price of state securities (SBN) not to drop sharply to make our financial system remain stable," the central bank`s governor, Darmin Nasution said. He admitted that BI had so far still focussed on the short-and medium-term SBN market but in line with increasing competition it would be impossible for it to remain in the market. Based on the conditions BI now wishes to study the possibility of buying longterm. He hoped the move would bring BI out of the short-and medium-term SBN market that has been crowded. We wish to settle bonds recap in several banks in the country to make the banks more efficient. Darmin said if banks in Indonesia are more efficient they can lend money at a cheaper interest. (Bloomberg) Indonesia's bond gains, credit default swap down Indonesian global bond's yield with tenor of 30 years decreased by 30 basis points to 5.30 percent and credit default swap (CDS) for five years was down by 10 basis points following the regaining of the second investment grade status from Moody's Investor Service, Finance Ministry debt management chief Rahmat Waluyanto said.Waluyanto made the statement about one hour after Moody raised the status from BBB- to BB+ with stable outlook and Fitch's rating agency followed suit earlier last December. Having investment grade status from at least two leading rating agencies is commonly required by global investors to execute their investment plan to the emerging economy. Investors purchasing the debt paper were those able to see long term prospect of the country's economy. "The global investors buying the bonds are from institution with high quality and sophisticated," he said at the Finance Ministry office here. Waluyanto said that the new status was going to decrease yields of both rupiah and U.S. dollar dominated bonds, debt default was going to decrease and the domestic financial market was going to be more stable. "Global investors confidence is going to rise and the potential of the capital reversal is going to be smaller," he said. Indonesia's global bond sales on Jan.9 was oversubscribed by 2.06 times to 3.6 billion U.S. dollar (the government raised 1.75 billion dollar), indicating that investor's confidence rises, the finance minister said. (Bloomberg)

Corporate News
Ogilvy appoints Katryna Mojica to head Indonesia operation, Gustavo Asman appointed as creative lead As part of the much anticipated new management line up for Indonesia's number 1 agency, Ogilvy & Mather has announced the appointment of Katryna Mojica to lead the Indonesia office. Mojica will move from Ogilvy in Vietnam where she has been for the past eight years (four of them as CEO) and start in Jakarta on March 26th. Alex Clegg will replace Mojica as CEO in Vietnam where he has been Managing Director and Planning Director for the past six years. Asman joins from Wing New York where he has been CCO for the past six years. With more than 100 awards to his name, including Cannes Lions, Clios, Montreaux and Echos, Argentina-born Asman is excited at the prospect of his new role: "Indonesia is currently one of the world's fastest growing markets and to be a part of that growth with Ogilvy is a dream come true." Mojica is from the Philippines and has been with Ogilvy for fifteen years to date. Most recently she has led the growth and expansion of the successful Vietnam office where new business and acquisitions have formed the core of the strategy there. In Indonesia, Kat's expertise in acquisitions, digital and new business development will complement her deep knowledge of the Ogilvy Asia Pacific operations," says David Mayo, President Ogilvy & Mather ASEAN. "She is absolutely the right person for the role as we launch our next Five Year Plan with acquisitions and world class ideas and strategy at the core. These moves represent a second wave of investment by Ogilvy in Indonesia, which is already the country's number 1 agency by billings, with more than 200 people and key clients including Unilever, Konimex and Nestle. In 2012, the Agency celebrates 40 years of operations in Indonesia and Mojica will be charged with leading the existing strong discipline leadership to implement an ambitious growth agenda. (Bloomberg) Pefindo assigned its rating to Mandala Multifinance Tbk Pefindo assigned its idA rating to PT Mandala Multifinance Tbk (MFIN or the Company). Outlook for the rating is stable. The rating reflects relatively strong market position in used motorcycle outside Java, favorable asset quality, and strong net-interest margin. However, the rating is constrained by the Companys relatively high operating expenses and tight competition in the industry. MFIN is a finance company for both new and used motorcycle. The ultimate major shareholder of MFIN, Jayamandiri Gemasejati, and its affiliated company, PT Lautan Teduh Interniaga, are the holder of Yamaha dealerships in West Java and Lampung respectively. However, MFINs business is not only focused on Yamaha motorcycle. The Company also provides financing for other brands, such as Honda and Suzuki. As of Sept. 30, 2011, MFIN is owned by PT Jayamandiri Gemasejati (70.42%), Alex Hendrawan (5.06%), and public (24.52%). (Pefindo)

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