Govt ready to issue global bond soon<\/p>\n
Rendi A. Witular, The Jakarta Post, Jakarta<\/p>\n
The government is upbeat that the upcoming dollar-denominated
\nbond sale, which may reach some US$1 billion, will rack up
\npotential investors after senior government officials launched a
\nnon-deal roadshow to lure demand for the offering.<\/p>\n
\"With all preparations for the offering already intact, the
\ngovernment hopes to launch the global bond offering any time soon
\nafter the global capital market conditions are deemed favorable,\"
\nMinister of Finance Jusuf Anwar said.<\/p>\n
\"After the recent roadshow, in which we received a very
\npositive response from investors, we will go directly to the
\nmarket as several key investors have already conveyed their
\ninterest,\" he said at the Presidential Palace on Wednesday.<\/p>\n
Jusuf, however, refused to disclose the exact amount of the
\nbonds, as well as the timing for the offering.<\/p>\n
Several government officials, led by Jusuf and Bank Indonesia
\ngovernor Burhanuddin Abdullah, met international investors this
\nweek in New York and London.<\/p>\n
Jusuf said the government would now focus on seeking a window
\nof opportunity to get good market conditions, good prices and a
\nbook-building process before it decided to offer the bonds, which
\nwould be the country's second overseas debt offering this year.<\/p>\n
The government would not hold another roadshow for the bond
\noffering, since the recent one was considered sufficient in
\nattracting investors, he added.<\/p>\n
The bond offering is aimed at plugging the state budget
\ndeficit this year, which is estimated to reach Rp 25.1 trillion
\n(US$2.43 billion) or about 0.9 percent of gross domestic product
\n(GDP).<\/p>\n
The government has appointed Citigroup Inc., Credit Suisse
\nFirst Boston and Merrill Lynch & Co. to underwrite the bond sale.<\/p>\n
Aside from the positive response during the roadshow, Jusuf
\nalso indicated several concerns from the investors, especially
\nabout the nation's fiscal condition as a result of the burdensome
\nfuel subsidy.<\/p>\n
Before it can attract investors to the bond sale, the
\ngovernment will raise fuel prices by an average of least 50
\npercent on Oct. 1. to help avoid missing the budget shortfall
\nthis year and to keep the fiscal situation sustainable.<\/p>\n
\"Overall, investors were positive about our fiscal and
\nmonetary management with a declining deficit trend, tax reform
\nproposal and a plan to adjust the fuel subsidy by raising fuel
\nprices,\" said Jusuf.<\/p>\n
The House of Representatives agreed on Tuesday night to raise
\nfuel prices by capping the fuel subsidy to Rp 82.9 trillion this
\nyear, from an estimate of over Rp 120 trillion if the government
\ndecided to maintain current fuel prices.<\/p>\n
The soaring fuel subsidy problem -- which has disrupted the
\ncountry's monetary stability -- has prompted Standard & Poor's to
\nlower its outlook on the country early this month from a positive
\nB+ foreign-currency debt rating to \"stable\". The rating is four
\nlevels lower than investment grade.<\/p>\n
Lower debt grades from rating agencies will drive up the
\ngovernment's cost in servicing the interest on the bonds, since
\ninvestors usually demand higher yields in order to cover the risk
\nof buying the bonds.<\/p>",
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"sponsor": "Okusi Associates",
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