Govt may postpone global bond sales<\/p>\n
Urip Hudiono
\nThe Jakarta Post\/Jakarta<\/p>\n
The currently volatile global market -- with crashing bluechip
\nstocks and soaring oil prices scaring investors away -- may force
\nthe government to reconsider its plan to issue US$1 billion in
\ndollar-denominated overseas bonds this month.<\/p>\n
\"If the market proves to be unfavorable, then there is a
\npossibility we will have to postpone the bond offering,\" Minister
\nof Finance Yusuf Anwar said on Friday.<\/p>\n
Yusuf said the government was still closely monitoring the
\nmarket for its bond issue plan as investors were still in a state
\nof shock following the recent collapse in the stock price of U.S.
\nautomotive giant General Motors, and the surge in global oil
\nprices, which hit another record high of $57 per barrel on
\nThursday.<\/p>\n
\"These factors have made global investors careful about taking
\nrisks in deciding where to put their money,\" he said.<\/p>\n
Also, the U.S. central bank's plan to again raise its interest
\nrate would also be unfavorable for the bond issue as it would
\nincrease the government's burden in servicing the bonds in terms
\nof their yields -- the rate of return that investors expect when
\nbuying the bonds.<\/p>\n
\"We expect to be able to keep the cost of borrowing on the
\nbonds to below 7 percent,\" he said.<\/p>\n
The government plans to issue Rp 43 trillion ($4.6 billion) in
\nbonds -- including the $1 billion in global bonds -- to help plug
\nthis year's state budget deficit.<\/p>\n
With Indonesia's overall credit rating still below investment
\ngrade, the bonds are considered junk bonds by International
\nrating agencies.<\/p>\n
Global rating agency Standard and Poor's assigned a B+
\nforeign-currency rating -- four levels below investment grade --
\nto the bonds.<\/p>\n
The government, however, managed to sell $1 billion of 10-year
\nbonds in March last year at a yield of 6.75 percent. The bonds
\nwere more than eight times oversubscribed.<\/p>\n
The government is currently holding roadshows in Singapore and
\nHong Kong to promote the global bonds to investors, and keep
\ntrack of market developments.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/govt-may-postpone-global-bond-sales-1447893297",
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