Government issues Rp 4 trillion bonds

Government issues Rp 4 trillion bonds

The Jakarta Post, Jakarta

The government sold some Rp 4 trillion (US$440 million) worth of
bonds on Tuesday, which was higher than the initial plan of Rp 3
trillion due to strong demand.

The seven-year bonds were sold at a weighted average yield of
10.88 percent, the Ministry of Finance said in a statement.

The government received a total Rp 5.4 trillion in bids, in
what market observers said was due to strong demand, particularly
from banks seeking higher return for their excess funds.

The government had been issuing bonds for the past several
months in a bid to raise cash to help finance the 2004 state
budget deficit and redeem maturing bonds, issued in the wake of
the late 1990s financial crisis.

So far it has issued around Rp 21.75 trillion bonds this year,
out of the total target of Rp 23 trillion. The government will
sell the last bond issue for this year on Nov. 30.

Moody's Investors Service rates Indonesia's local-currency
debt B2, while Standard & Poor's assigns a ranking of B plus.
Both are junk, or high-yield, high-risk designations.

The government's bond issue has largely received strong
response from investors thanks to the country's improving
macroeconomic indicators. The successful general election has
further improved sentiment in the country as political risk
coming from the election has been eliminated.