Executive Summary

Key insights and market outlook

Bank Indonesia (BI) has expanded its repurchase agreement (repo) collateral to include corporate bonds issued by PT Sarana Multigriya Finansial (SMF) ¹

². In the first auction, BI injected Rp290 billion liquidity into the market through a 7-day repo with a 4.85% interest rate ². This move aims to deepen the financial market and provide more financing options, particularly for the housing sector.

Full Analysis

02

Deep Dive Analysis

Bank Indonesia Expands Repo Collateral to Corporate Bonds

Historic Move to Deepen Financial Market

Bank Indonesia (BI) has made a significant policy shift by accepting corporate bonds as collateral for repurchase agreements (repo) for the first time ¹

. The inaugural repo auction using PT Sarana Multigriya Finansial (SMF) bonds successfully injected Rp290 billion liquidity into the financial system through a 7-day tenor repo at a weighted average rate of 4.85% ².

Market Impact and Future Prospects

This expansion of eligible collateral from government securities to corporate bonds marks a crucial step in developing Indonesia's financial market infrastructure. BI's Senior Deputy Governor Destry Damayanti emphasized that this move will help lower funding costs and enhance market liquidity ¹

. The successful auction received bids worth Rp290 billion from nine banks, demonstrating strong market interest ².

Rationale and Long-term Implications

The decision to include SMF bonds was based on their high credit rating (idAAA) and their role in supporting the housing sector ²

. BI has indicated openness to accepting other high-quality corporate bonds in future repo transactions, potentially expanding the eligible collateral pool from the current Rp25.4 trillion outstanding SMF bonds ².

References