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Investment Strategy
Nov 30, 2022
On November 11th, 2022, the Bank of Indonesia officially released one of the SBN Savings series ST009. ST009, just like any other SBN saving series, is an investment saving for an individual citizen of Indonesia
What is SBN?
A Scriptless Government Bond Account or SBN is an investment product issued and guaranteed by the Government of the Republic of Indonesia. The retail of SBN is solely to give opportunities to people by actively participating and reinforcing funds for Indonesia's economic growth. Simply put, we provide fund aid to the government, which will be completely returned to us in time. Every month, there will be a fundamental revenue yield for those who bought the SBN. There are various SBN to purchase to help our country’s growth.
5 kinds of SBN issued by the government until today:
1. Retail Government Bonds (ORI)
ORI is one of the SBN retailers that suits any Indonesian citizen and can be purchased through a distribution partner at the stock market. ORI is issued without scripless, and people can trade ORI through domestic investors. It has a fixed-rate coupon system and the potential to get capital gain.
2. Savings Bond Ritel (SBR)
Referring to the previous series SBR010, SBR has distinct characteristics to be purchased by individuals from one million rupiahs within 2 years until its due. SBR uses floating with floor system at lowest values coupon and has the early redemption facility
Society has rejoiced by the advantage and secure way of the availability of SBR. It also becomes an opportunity to help and build our economic growth actively together through a state budget plan (APBN)
3. Retail Interest (SR)
Retail Interest (SR) is a Sharia investment product leased to the government for Development. Returns come from Investment profits, and the returns earned will be paid monthly and can be traded on the secondary market between domestic investors because it is based on Sharia principles, which do not contain elements of gambling, ambiguity, and usury. Then SR was assessed according to Sharia provisions by the MUI and the National Sharia Council.
4. Savings Interest (ST)
Savings Interest is one of the last series issued, namely ST009, which is also known as Green Retail Bond, whose benefits are to finance environmentally friendly projects in the transportation sector and resilience to the impacts of climate change. This Savings Intrest is intended for individual Indonesian citizens who are safe and guaranteed by the state, have competitive rates of return, are easy to buy, affordable, and are declared sharia-compliant by the National Sharia Council - Indonesian Ulema Council (DSN-MUI). Sharia.
5. Cash Waqf Linked Interest Retail (CWLS Ritel)
CWLS Retail is a waqf investment in state obligations whose rewards are channeled by Nazhir (fund manager and waqf activity). This CWLS aims to finance social programs and economic empowerment of the people, whereas the previous series was issued by the government, namely SWR002.
After understanding all types of Saving Bonds, we will also consider the benefits and the yield mechanism. Because by knowing, we can choose the kind of SBs that suits our individual needs
The Special Floating with Floor
The Floating with Floor system means floating with the minimum limit, and this system is closely related to BI7DRR. In simple terms, the value of a coupon will increase according to the BI7DRRR interest rate but will not drop past the predetermined minimum limit and will be reviewed every three months. Floating with Floor is commonly known by Retail Bond Investor. It refers to the coupon or the amount of interest they’ll receive depending on the BI7DRR, also known as the BI-7 Day Reverse Repo Rate. As interest rates increases, so do the amount of coupons they’ll receive!
FIX Rate
If compared with Floating with Floor, that's always affected by the interest rate, Fixed rate coupons generate a stagnant value with its original interest rate and will not change until maturity.
ST009 Investment for the Nation, with a Floating with Floor Coupon
Thanks to the Floating with Floor system, the coupon value of a savings bond is adaptive depending on the value of the B17DRR itself. If at any time the value goes up, your profit will also increase, but if it goes down, it will not be lower than the minimum limit set by the government.
The increase in Government Bonds was influenced by intervention from BI to strengthen the stabilization of the rupiah so that it remains at a reasonable market value as an effort to control inflation, mainly imported inflation, through intervention in the foreign exchange market, both spot transactions, domestic non-deliverable forwards (DNDF), as well as purchases/ sale of Government Securities (SBN) in the secondary market.
With these floating with floor yields, you can buy several Bonds, including ST and SBR. Now is a perfect time. There is an offer for ST009 from 11 November 2022 to 30 November 2022.
All state securities that use floating with floors are closely related in value and function in the midst of a very challenging economy at this time. Apart from operating based on sharia rules that have been approved by the MUI, these Securities will also guarantee you that your investment journey will be safer, more accessible, affordable, and profitable because it is fully guaranteed by the government.
The question is, what happens if the BI-7 Day Reverse Repo Rate (B17DRR) increases? As explained above, thanks to the Floating with Floor system, you will continue to enjoy maximum returns when your BI7DRR increases. On the other hand, your investment value will not be lower than the minimum return if the BI7DRR decreases at any time. This is because, in essence, the value of the ST009 Interest is always guaranteed by the government so that your investment is maintained.
Not only does it provide several conveniences and benefits that guarantee the value of your investment will grow even more with ST009, but the minimum yield of 6.15% is also very promising by implementing Floating with Floor. You can buy ST009 through the BRImo application or contact your Priority Banking Officer until November 30, 2022. Don't miss it by visiting the BRI Prioritas website for complete information.
