Govt goes ahead with bond issue plan<\/p>\n
The Jakarta Post, Jakarta<\/p>\n
The government said on Friday it was moving ahead with its plans
\nto issue new bonds later this month despite the ongoing war in
\nIraq which has caused jitters in the financial market.<\/p>\n
Fuad Rahmany, head of state bonds management center, said that
\nthe bonds would likely carry a fixed interest rate to help
\nmaintain investor appetites for the bonds.<\/p>\n
"It is most likely that the bonds (to be issued) will carry a
\nfixed rate...we do not want to disappoint the market.<\/p>\n
"Under the current market condition investors would look for
\nbonds carrying fixed interests rate," Fuad said.<\/p>\n
In addition to the war situation, the current declining trend
\nin central bank benchmark interest rates will make bonds carrying
\nvariable rate less appealing.<\/p>\n
The government has planned to issue a total of Rp 7.7 trillion
\n(about US$ 845 million) in new bonds this year to help finance
\nmaturing government bonds. This has been approved by the House of
\nRepresentatives.<\/p>\n
It is still not yet clear how large the March bond issue will
\nbe.<\/p>\n
But the government has said that it preferred to issue
\ntreasury bonds (with maturity periods of over 12 months) first
\nrather than treasury bills (short-term bonds with maturity of
\nless than 12 months).<\/p>\n
Fuad said that the government wanted to set the maturity
\nperiod of the new bonds at 8-10 years.<\/p>\n
The government, late last year issued a successful treasury
\nbill as it was oversubscribed. The purpose of the issue was also
\nto finance maturing government bonds.<\/p>\n
As of December last year, the government's domestic debt stood
\nat Rp 650.4 trillion -- all in the form of bonds, with a large
\nchunk of them maturing between 2004 and 2009. The huge debt is a
\nresult of the cost to bail out the banking industry during the
\nlate 1990s financial crisis.<\/p>\n
The government has said that it must issue the bonds to avoid
\na fiscal disaster and maintain investor confidence.<\/p>",
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