Low BI Rate, The Retail Sukuk SR022 Offer Will Become More Festive

Low BI Rate, The Retail Sukuk SR022 Offer Will Become More Festive

Tuesday, 27 May 2025

The anticipated reduction in the Bank Indonesia (BI rate) benchmark interest rate is expected to enhance the appeal of retail government bonds, specifically the Sukuk Ritel series SR022, due to its attractive coupon rate that draws investor interest. As is well known, Bank Indonesia (BI) has lowered the benchmark interest rate by 25 basis points from 5.75% to 5.5%, continuing its loose monetary policy into January 2025. Domingus Sinarta Ginting, Head of Investment Specialist at Sinarmas Asset Management, stated that the trend of declining interest rates will stimulate investor interest in SR022. "The momentum of the declining interest rate trend will encourage interest in fixed-income instruments such as SR022," he recently told Bisnis. It is also noted that the Directorate General of Financing and Risk Management (DJPPR) of the Ministry of Finance is offering SR022 from May 16 to June 18, 2025. This third offering of retail government bonds this year is available in two series: SR022T3 with a 3-year tenor and a coupon of 6.45%, and SR022T5 with a 5-year tenor and a coupon of 6.55% per annum.

Consequently, there is a difference of approximately 100 basis points between the benchmark interest rate and both SR022 series. On the other hand, investment instruments that provide monthly coupons, such as deposits, offer lower interest rates. For instance, the deposit guarantee interest rate set by the Deposit Insurance Corporation (LPS) for commercial banks is 4.25%, while for People's Economic Banks (BPR), it is 6.75%. From a tax perspective, the interest on government bonds is subject to a 10% tax, whereas deposit interest is taxed at 20%. Therefore, it is highly likely that investors will consider the retail government bond series SR022 as an alternative investment instrument with monthly coupons.

In agreement with this, Suhindarto, Head of the Economic Research Division at PT Pemeringkat Efek Indonesia (Pefindo), explained that SR022 features a fixed coupon rate, making it unaffected by changes in interest rates. "The fixed rate feature is appealing amid declining interest rates, as the coupon percentage of SR022 will not decrease.

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