- Covered Interest Rate Parity suggests that SBN yields are not currently overvalued, even as they approach historic lows.
- SBN valuation can be justified by low NDF premia, which in turn can be traced to decreased foreign ownership in bonds and successful BI intervention in the forward market.
- Low SBN yields may not benefit loan growth, as it comes at the cost of higher absorption of domestic liquidity into SBN.
