Investors should maintain a Neutral outlook on IDR bonds: Standard Chartered

Quotes from Standard Chartered:

-IDR bond yields dropped c.20bps following this week's surprise BI and FASBI rate cuts. The benchmark 10Y IDR bond yield (FR70) traded close to its 2015 year-to-date low of 6.85% before rebounding to 7.05%. We believe this indicates that the market is cautious about further rate cuts by BI.

-Although we expect another 25bps policy rate cut in Q1-2015, we recommend that investors maintain a Neutral outlook on IDR bonds and use any significant pullback in yields to build positions in the bonds. On the back of BI's surprise move, we also revise our IDR bond yield forecasts lower.