Jason Gozali, founder and CEO of Investor Muda, one of the biggest investor communities in Indonesia, said that investors’ appetite in SBN was growing.

“So far, retail investors' interest in SBN is increasing because it is considered low-risk in comparison to other volatile assets,” he said in Jakarta on April 14.

This did not mean, however, that many investors in the equity market had switched to the bond market, said Jason. On the contrary, many online stock trading sites had seen more than a 20 percent rise in trading value compared to last year’s figure.

More moderate millennial investors preferred bonds as their investment vehicle and more aggressive millennial investors generally purchased bluechip stocks while they were still cheap, explained Jason, who is also a fund manager and investment consultant.

“With the ongoing volatile condition and economic [slowdown], investment potential in bond instruments, including retail bonds, are becoming more attractive,”  head of fixed income research Handy Yunianto of Mandiri Sekuritas  told The Jakarta Post on April 15.

With close to zero risk, relatively short tenors and attractive yields in comparison to the market interest rate, government bonds were among the top picks in investment, he elaborated.

Handy shared Jason's view that the growing interest in bonds did not indicate that equity investors had migrated to the bond market.  Each investor had their own risk-return preference, he noted.

“However, investing in bonds might see a slight increase” on expectations of lower interest rates, he said, stabilizing currency and curtailing economic growth.

Assistant vice president Adra Wijasena of RHB Sekuritas Indonesia told the Post on Friday that in spite of current global uncertainties prompting retail investors to hold on to their cash, investing in SBN was still attractive.

Adra explained that liquidity risk could be minimized as long as the trading volume and frequency of SBN in the secondary market was still “quite good”.

The confidence of retail investors was apparent in the latest issuance of sharia-compliant government retail bonds (Sukri), while the government saw oversubscription of its Sukri SR-012 bond series between Feb. 24 and March 18.

“The public response was very good," government debt papers director Deni Ridwan of the Finance Ministry told the Post on May 14.

The government raised its bond issuance target from an initial Rp 8 trillion (US$537.53 million) to Rp 12.14 trillion, according to the Finance Ministry's financing and risk management office (DJPPR).

But the Sukri SR-012 saw a little under 24,000 buyers compared to 35,000 buyers for the Sukri SR-011 in 2019. The demographics of bond buyers had also changed, with millennials making up 39.58 percent of SR-012 buyers and baby boomers making up 36.5 percent of SR-011 buyers, according to DJPPR data.

“Details on the [bond] type and amount are still under discussion. Hopefully, we will be able to publish the information in the near future,” Deni said, when asked about the upcoming issuance of retail SBN in June.

The government plans to issue the retail savings bond (SBR) series SBR-010 from June 23 to July 9, according to the Finance Ministry's issuance calendar.

The government also plans to issue six SBN bonds this year, down from 10 bonds last year. Government bonds have a key role in financing the state budget and the national COVID-19 mitigation efforts.

“We will prioritize SBN issuance through a market mechanism, including retail [bonds], [valued at] around Rp 50 to Rp 70 trillion,” Finance Minister Sri Mulyani Indrawati said on April 30 at a working meeting with House of Representatives Commission XI overseeing financial affairs.

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