Govt upbeat about bond issue amid improved rating<\/p>\n
The Jakarta Post, Jakarta<\/p>\n
With investors' early response promising, the government is
\nconfident that it will do well in its plans to offer at least
\nUS$1 billion of its securities on global bond markets later this
\nmonth.<\/p>\n
"The spread of our bond yield is decreasing, while our credit
\nrating has improved," State Minister of State Enterprises
\nSugiharto said on Tuesday, after a meeting with President Susilo
\nBambang Yudhoyono to report the results of his roadshow to Hong
\nKong for the sales.<\/p>\n
Only recently, the government held roadshows for potential
\ninvestors in Singapore and Hong Kong, as well as other roadshows
\nto other world financial centers in the U.S. and Europe.<\/p>\n
The finance ministry's director general of state treasury,
\nMulia Nasution, said that investors' response during the recent
\nroadshows had been promising, amid Indonesia's improving credit
\nrating.<\/p>\n
Sugiharto explained that Indonesia's global bond yield used to
\nbe 277 basis points -- or 2.77 percent -- above the benchmark
\nyields of U.S. treasury bills.<\/p>\n
"I think it would be comfortable enough if we can achieve a
\nyield for our bonds of between 180-190 basis points above the
\nU.S. treasury bills issued in February," Sugiharto said.<\/p>\n
Market analysts have said that Indonesia's global bonds would
\nbe regarded as less attractive if its yield difference with U.S
\ntreasury bills -- or spread -- was above 2 percent.<\/p>\n
Sugiharto admitted, however, that many investors were still
\nwaiting for the latest news on U.S. auto giant General Motors
\nCorp.'s bonds, which recently fell to junk status and sent the
\nglobal bond market into a volatile mood.<\/p>\n
Several bond issues have been disturbed due to the situation,
\nmaking deals hard to price and more expensive for borrowers.<\/p>\n
"So what is important now is the timing, sizing and pricing of
\nthe bonds," Sugiharto said.<\/p>\n
After considering postponing the bond offering due to the
\nsituation, Minister of Finance Yusuf Anwar confirmed on Monday
\nthat it would go ahead as scheduled.<\/p>\n
The government plans to offer bonds amounting to Rp 43
\ntrillion (about $4.6 billion) throughout the year, including the
\ndollar-dominated bonds -- the proceeds of which would be used to
\nhelp plug the state budget deficit.<\/p>\n
Last year, the government managed to sell $1.5 billion dollar-
\ndenominated bonds, at a yield of 6.75 percent.<\/p>",
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"sponsor": "Okusi Associates",
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