BI to issue bonds in U.S.

BI to issue bonds in U.S.

JAKARTA (JP): Bank Indonesia will issue government bonds in the United States in July or August this year in an effort to diversify the central bank's financial sources.

The central bank announced here yesterday that the bonds, the first to be issued since 1988, are expected to become a benchmark of debt instruments issued by private Indonesian companies in the United States.

"It is therefore expected that the terms and conditions imposed on private Indonesian borrowings will be less onerous," the central bank said in a statement.

Salomon Brothers will be appointed as the lead manager of the bond issue, with Goldman Sachs, JP Morgan and Merrill Lynch acting as co-managers.

According to Bank Indonesia, borrowings raised by private Indonesian companies overseas, particularly in the United States, are relatively expensive, owing to the absence of a benchmark for the terms and conditions of debt instruments.

Bank Indonesia, acting on behalf of the Indonesian government, has in the past issued a series of bond instruments in Germany, Japan, the Netherlands and Kuwait. The latest issue, worth DM300 million, was floated in Germany on Oct. 24, 1988. It matured in 1994.

The government has since preferred to raise standby loans from syndications of overseas banks to back up the country's balance of payments. (hen)