12 local banks allowed to trade treasury bonds

JAKARTA (JP): Bank Indonesia allowed 12 local banks on Tuesday to trade treasury bonds issued by the government last year to finance their recapitalization costs.

They include Bank Lippo, Bank BCA, Bank Danamon, Bank Universal, Bank Artamedia, Bank Tiara, Bank Mandiri, Bank Bukopin and four provincial administration-owned banks of East Java, Aceh, North Sulawesi and Lampung.

For the first day, the banks would be allowed to trade about Rp 2.6 trillion worth of bonds or about 10 percent of the bonds issued to finance their recapitalization costs, the central bank said.

The bonds to be traded include five-year bonds with a fixed rate of 12 percent, and variable rate bonds maturing in 2002, 2003 and 2004.

The rate of the bonds maturing in 2002 is 11.40 percent. The rate for those maturing in 2003 and 2004 is 13.04 percent, the central bank said in a statement.

Bank Indonesia will soon announce additional bonds that banks will be able to trade in the secondary market.

Investors wishing to buy the bonds should apply to one of the sub-registries appointed by Bank Indonesia: PT Bank Niaga, Deutsche Bank, and PT Kustodian Sentral Efek Indonesia.

The government has so far issued Rp 282 trillion worth of bonds to finance the recapitalization of the country's ailing banks. The total recapitalization cost is expected to reach Rp 392 trillion.

The government injected the bonds into the banks to boost their capital adequacy ratio (CAR) level to the minimum 4 percent requirement, But the recapitalized banks could not freely sell the bonds to raise badly needed fresh cash.

Bonds dealers said here later on Tuesday that the bonds received a cool response from the market as potential buyers were still confused about the buying procedures.

But they believed there was likely to be reasonable demand when the bonds actually began coming onto the market in coming days. (hen)