Govt to launch road show next month to market int'l bonds<\/p>\n
The Jakarta Post, Jakarta<\/p>\n
The government will visit a number of major financial centers
\nincluding New York, London, Singapore and Dubai next month to
\nassess investors' interest in a planned international bonds
\nissue, said Bank Indonesia Governor Burhanuddin Abdullah.<\/p>\n
\"In mid-September we will launch a non-deal road show, as a
\nprecursor to the international bonds issue,\" Burhanuddin said on
\nthe sidelines of a seminar here.<\/p>\n
While the first three cities have long been known as the
\nworld's major financial centers, Dubai was also picked because it
\nwill host the annual meeting of the International Monetary Fund
\n(IMF), where decision-makers across the world would be present --
\nincluding those from the business sector, he explained.<\/p>\n
The government, as revealed in its newly proposed draft 2004
\nstate budget, plans to issue international bonds worth US$400
\nmillion (Rp 3.48 trillion) next year, as part of foreign
\nfinancing to help cover an estimated deficit of Rp 24.9 trillion.<\/p>\n
The government is in dire need of extra financing sources, as
\nits International Monetary Fund economic bailout program will end
\nlater this year. The country would then be ineligible for the
\ndebt rescheduling facility from the Paris Club of creditor
\nnations. In the past couple of years, the country was able to
\nsave around $3 billion per year through the rescheduling
\nfacility.<\/p>\n
The funds raised from the issuance of international bonds will
\nbe complemented by other options, including fresh loans from the
\nConsultative Group on Indonesia (CGI), privatization of state-
\nowned enterprises, the sale of various assets under the
\nIndonesian Bank Restructuring Agency (IBRA) and the issuance of
\ndomestic bonds.<\/p>\n
Under the draft 2004 state budget, proceeds from the domestic
\nfinancing sources will make up the majority of the deficit
\nfinancing scheme, and is expected to generate Rp 39.8 trillion.<\/p>\n
Next year's international bonds issue, if realized, would be
\nthe first time the country has issued international bonds since
\nthe 1997 financial crisis. Before the crisis, the government
\nissued some $400 million in Yankee bonds.<\/p>\n
Analysts have said that global investors, seeking better
\ninvestment returns amid the declining global interest rate and
\nvolatile stock market, would be attracted to the planned bonds
\nissue.<\/p>\n
Moreover, the country has gained macroeconomic stability at
\nhome, and the stronger rupiah, benign inflation and declining
\ntrend in the central bank's benchmark interest rate are expected
\nto further improve Indonesia's sovereign ratings.<\/p>\n
In this economic climate, a number of large local firms have
\nsuccessfully issued overseas bonds in order to raise working
\ncapital and to repay debts.<\/p>\n
2004 Deficit Financing
\n--------------------------------------------------<\/p>\n
Projection % of<\/p>\n
(Rp trillion) GDP
\n---------------------------------------------------
\n1. Domestic financing 39.85 2.0
\n2. Foreign financing (14.90) (0.7)<\/p>\n
a. Gross drawing 29.97 1.5<\/p>\n
1. Program loan 6.52 0.3<\/p>\n
2. Project loan 19.97 1.0<\/p>\n
3. Int'l bonds 3.48 0.2<\/p>\n
b. Amortizations (44.89) (2.2)<\/p>\n
1. On schedule (44.89) (2.2)
\n----------------------------------------------------
\nTotal financing 24.92 1.2
\n----------------------------------------------------
\nSource: Ministry of Finance<\/p>",
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