BONDS VALUATION ON CHANGING INTEREST RATE
Anggoro Budi Nugroho
MASTER OF BUSINESS ADMINISTRATION
SCHOOL OF BUSINESS AND MANAGEMENT
INSTITUTE OF TECHNOLOGY BANDUNG
President Susilo Bambang Yudhoyono raised subsidized fuel prices on June 22, a move the government forecasts will contribute to annual inflation of 7.2 percent, compared with 5.9 percent last month. Bank Indonesia lifted its benchmark rate to 6 percent on June 13, the first increase since 2011, and Governor Agus Martowardojo said this week the central bank will “strengthen its policy mix” to tackle consumer-price gains, as reported on Jakarta Globe on 5 July 2013. Surprisingly the inflation rate keeps going up along with the SBI rate. According to the recent news from sindonews.com on 6 July 2013, the inflation rate on July will increase to 2,38%, as an impact of that the SBI rate is also increasing from 6% to 6,5% this month. In this situation, the changing interest rate would affect the Bonds’ prices. Reported on Jakarta Globe that State-controlled airline Garuda Indonesia and property firm Bumi Serpong Damai led 11.7 trillion rupiah ($1.2 billion) of issuance, almost double the total in May, according to data compiled by Bloomberg. These companies rushed their bonds’ issuance to avoid the interest rate to going up. But what will actually happen to these recently issued bonds? On this paper we would like to measure each of bond’s value to finally decide which bond investment should be made. There are three bonds that would be valued, 1.G1AA01CN1 from PT.Garuda Indonesia Tbk, 2.APLN01CN1 from PT.Agung Podomoro Land Tbk, and 3.BSDE01CN2 from PT.Bumi Serpong Damai Tbk. The reason for these bonds to be valued is because of their issuance date ranging from June-July 2013.
Seeing the inflation rate goes up for this month and also for this year, it is important for investors to choose bonds that...