Experts see strong interest in govt bonds<\/p>\n
The Jakarta Post, Jakarta<\/p>\n
The government said over the weekend it was planning to sell some
\nRp 2.5 trillion worth of sixth government domestic bonds on Sept.
\n28, in what an analyst said as timely, given the positive
\nsentiment to be derived from Monday's election runoff.<\/p>\n
The upcoming issue is expected to draw healthy interests from
\ninvestors, notably from domestic investors, according to Fauzi
\nIchsan, an analyst at Standard Chartered Bank .<\/p>\n
The government said in a press statement that it would auction
\nthe bonds, which carry a fixed coupon rate of 11 percent, and
\nwill mature on Oct. 15, 2014.<\/p>\n
\"After the election, where the uncertainty has been reduced,
\ninvestors -- rather than keeping their money on time-deposits or
\nSBI (Bank Indonesia promissory notes) -- they would instead
\nreturn to the bond market for a higher gain.<\/p>\n
\"So, I think the upcoming bond issue would draw a healthy
\nresponse from investors, with sentiment from the election
\noffsetting that of the bomb blast recently,\" Fauzi said in
\nreference to a powerful bomb attack in front of the Australian
\nembassy.<\/p>\n
Fauzi was defying rising concerns that the high-powered blast,
\nwhich has so far killed nine people and injured more than 180,
\nwould serve as an excuse for investors to ask for a higher yield.<\/p>\n
He was pointing as an example how Jakarta's market, both
\ncapital and currency, had staged a quick recovery only a day
\nafter the blast.<\/p>\n
Incumbent President Megawati Soekarnoputri, who has taken up
\nthe current administration for about three years, will on Monday
\ncompete head-on with her former chief security minister Susilo
\nBambang Yudhoyono.<\/p>\n
Fauzi cannot predict a yield that could be priced in the next
\nbond issue.<\/p>\n
In the last bond offering on Aug. 24, the government sold Rp 3
\ntrillion of 10-year bonds at a weighted average yield of 11.74
\npercent. It was the first time the government has issued a 10-
\nyear bond -- previously it has only issued seven or eight-year
\nbonds.<\/p>\n
In the past years, the government has been issuing bonds to
\nraise fresh funds to plug the budget deficit, whose financing
\nability has been heavily limited by huge payments of debts --
\nmostly domestic ones.<\/p>\n
The deficit has been estimated at Rp 24.4 trillion, or about
\n1.2 percent of gross domestic product.<\/p>\n
Of the total Rp 32.5 trillion worth of bond issues planned for
\nthis year, it has so far auctioned just above Rp 14 trillion
\nworth of domestic bonds, in addition to $1 billion in dollar-
\ndominated sovereign bonds.<\/p>\n
Bond issues as of Aug. 24
\n--------------------------------------
\nAuction Bond size Bids received
\n--------------------------------------
\nFeb. 24 Rp 2.53t Rp 5.3t
\nMarch. 16 Rp 2.00t Rp 5.7t
\nApril 27 Rp 3.00t Rp 9.9t
\nJuly 27 Rp 3.50t Rp 6.3t
\nAug. 24 Rp 3.00t Rp 3.7t
\n--------------------------------------
\nSource: Ministry of Finance<\/p>",
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"sponsor": "Okusi Associates",
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