Government increase bond sale by 20%<\/p>\n
Netty Ismail and Shanthy Nambiar, Bloomberg\/Singapore<\/p>\n
Indonesia raised the size of its biggest overseas bond sale to
\nUS$1.5 billion because of excess demand, after a cut in fuel
\nsubsidies restored investor confidence in the nation's finances.<\/p>\n
Investors placed orders for about $3.8 billion of bonds,
\ntriple the original $1.25 billion on offer, two bankers familiar
\nwith the transaction said, asking not to be identified before the
\nsecurities are priced later on Wednesday.<\/p>\n
The demand reflected improving confidence in the nation's
\ncurrency and returns that were set higher than the nation's
\noutstanding debt and bonds with a similar rating. The rupiah has
\ngained 18 percent from a four-year low reached on Aug. 30 on
\noptimism President Susilo Bambang Yudhoyono is making progress
\ntoward meeting budget goals and protecting currency reserves.<\/p>\n
\"They are finally getting the budget in order,\" said Anton
\nHauser, who holds the nation's dollar bonds among the 1.1 billion
\neuro (US$1.3 billion) of emerging market debt he helps manage at
\nVienna-based Erste Sparinvest KAG.<\/p>\n
\"They have also tried to keep the currency quite strong by
\nraising interest rates.\" Hauser said he plans to buy the new
\nbonds.<\/p>\n
The bonds may be sold with a yield at the lower end of the
\ntarget range, according to an e-mail sent to investors by one of
\nthe sale's arrangers.<\/p>\n
Indonesia expects to price the 10-year bonds yielding 7.625
\npercent to 7.75 percent, or as much as 3.4 percentage points more
\nthan U.S. Treasuries, according to the e-mail. The government is
\nseeking to price the 30-year bonds to yield 8.625 percent to 8.75
\npercent, the e-mail said.<\/p>\n
Pricing at the low end would mean the new 10-year bonds would
\nprovide investors a yield of 22.5 basis points more than the
\ncurrent benchmark bond.<\/p>\n
Indonesia's 7.25 percent bond due in April 2015 yielded 7.4
\npercent as of 5:40 p.m. in Singapore, according to data provided
\nby Deutsche Bank AG. The yield is 15 basis points higher than it
\nwas on Sept. 30, before the Bali bombings.<\/p>\n
\"They are willing to offer a certain amount of yield pickup
\nover the existing 2015 maturity bonds,\" said Dilip Parameswaran,
\nhead of Asian credit research at Calyon in Hong Kong. \"All the
\nthings that the government has been trying to do are the right
\nthings in the right direction, so bond investors would be happy
\nto buy into these bonds.\"<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/government-increase-bond-sale-by-20-1447893297",
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"sponsor": "Okusi Associates",
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