Experts see strong interest in govt bonds
Experts see strong interest in govt bonds
The Jakarta Post, Jakarta
The government said over the weekend it was planning to sell some
Rp 2.5 trillion worth of sixth government domestic bonds on Sept.
28, in what an analyst said as timely, given the positive
sentiment to be derived from Monday's election runoff.
The upcoming issue is expected to draw healthy interests from
investors, notably from domestic investors, according to Fauzi
Ichsan, an analyst at Standard Chartered Bank .
The government said in a press statement that it would auction
the bonds, which carry a fixed coupon rate of 11 percent, and
will mature on Oct. 15, 2014.
"After the election, where the uncertainty has been reduced,
investors -- rather than keeping their money on time-deposits or
SBI (Bank Indonesia promissory notes) -- they would instead
return to the bond market for a higher gain.
"So, I think the upcoming bond issue would draw a healthy
response from investors, with sentiment from the election
offsetting that of the bomb blast recently," Fauzi said in
reference to a powerful bomb attack in front of the Australian
embassy.
Fauzi was defying rising concerns that the high-powered blast,
which has so far killed nine people and injured more than 180,
would serve as an excuse for investors to ask for a higher yield.
He was pointing as an example how Jakarta's market, both
capital and currency, had staged a quick recovery only a day
after the blast.
Incumbent President Megawati Soekarnoputri, who has taken up
the current administration for about three years, will on Monday
compete head-on with her former chief security minister Susilo
Bambang Yudhoyono.
Fauzi cannot predict a yield that could be priced in the next
bond issue.
In the last bond offering on Aug. 24, the government sold Rp 3
trillion of 10-year bonds at a weighted average yield of 11.74
percent. It was the first time the government has issued a 10-
year bond -- previously it has only issued seven or eight-year
bonds.
In the past years, the government has been issuing bonds to
raise fresh funds to plug the budget deficit, whose financing
ability has been heavily limited by huge payments of debts --
mostly domestic ones.
The deficit has been estimated at Rp 24.4 trillion, or about
1.2 percent of gross domestic product.
Of the total Rp 32.5 trillion worth of bond issues planned for
this year, it has so far auctioned just above Rp 14 trillion
worth of domestic bonds, in addition to $1 billion in dollar-
dominated sovereign bonds.
Bond issues as of Aug. 24
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Auction Bond size Bids received
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Feb. 24 Rp 2.53t Rp 5.3t
March. 16 Rp 2.00t Rp 5.7t
April 27 Rp 3.00t Rp 9.9t
July 27 Rp 3.50t Rp 6.3t
Aug. 24 Rp 3.00t Rp 3.7t
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Source: Ministry of Finance