Wed, 09 Mar 2005

Govt to issue Rp2t in T-bills next month

Urip Hudiono The Jakarta Post/Jakarta

The government plans to offer up to Rp 2 trillion (about US$215 million) in one-year treasury bills, or T-bills, next month, according to a finance ministry official.

Director General of State Treasury Mulia Nasution said on Tuesday the auction of the short-term promissory notes would take place in April, after the planned sale of dollar-dominated overseas bonds slated for later this month.

"We are planning at least four offerings of treasury bills throughout the year," he said, adding that the government hopes to reap as much as Rp 2 trillion from each of the offerings.

"We will not be offering too many bills at first, probably the same as usual," he said.

"But if the market demand turns out to be good, we hope to sell even more."

Treasury bills are short-term promissory notes that mature in one, three or 12 months.

The government has been offering both rupiah- and dollar- denominated bonds -- both of which mature within a year, to help redeem maturing debts and help finance the budget deficit, which is estimated to reach about 1 percent of gross domestic product (GDP) this year.

The government sold Rp 8 trillion worth of bonds in its two first local bond offerings this year.

Later this month, the government will offer between $1 billion to $1.5 billion worth of bonds, having appointed Citigroup, Deutsche Bank AG and UBS AG as the bonds' underwriters earlier this year.

The introduction of treasury bills will complete the government's bond offerings and help expand the local bond market as investors are likely to consider the bills more attractive than treasury bonds.

The government plans to sell a total of Rp 43 trillion worth of domestic bonds and bills this year. Last year, it sold Rp 32.5 trillion worth of bonds, including $1 billion in global bonds.

"How many treasury bills we offer will be determined by how much we get from our usual local bond and global bond offerings," Mulia said.

Market analysts predict that government bond issues this year will do well, in part due to the country's steadily improving economy as reflected in the recent upgrading of its debt ratings.

Global rating agency Moody's recently upgraded its outlook for Indonesia's current B2 long-term local currency rating -- which is still five levels below the investment grade -- to "positive" from "stable".

Fitch Ratings also raised Indonesia's long-term foreign and local currency ratings to BB- from B+, and affirmed its short- term rating at B, both with positive outlooks.

Standard and Poor's, meanwhile, upgraded Indonesia's long-term foreign currency to B+ from a B and the local currency rating to BB from B+, all with positive outlooks.