Government sells Rp 3t worth of bonds

The government on Tuesday issued Rp 3 trillion (about US$323.79 million) worth of bonds at a weighted average yield of 11.74 percent.

The Ministry of Finance said in a statement the 10-year bonds, which pay a coupon of 11 percent, mature on Oct. 15, 2014.

The size of the issue was larger than the planned Rp 2 trillion issue as demand was strong, the statement said. The ministry said it had received Rp 3.74 trillion worth of bids.

The government plans to issue a total of Rp 32.5 trillion worth of bonds this year to help finance the 2004 state budget. So far it has issued Rp 14 trillion worth of rupiah-based bonds. In March, the government issued its first dollar bonds worth $1 billion, which was the first sovereign issue since the 1997 regional financial crisis.

The average yield of the Tuesday bond issue was slightly higher than the average yield of previous issues amid stronger inflationary risk, however, analysts said the yield was in line with market expectations. The release is also the first time the government has issued a 10-year bond -- previously it has only issued seven or eight-year bonds.

The government plans to another round of bonds on Sept. 28.

Meanwhile, Fuad Rahmany, head of the bonds management at the ministry, said the government had no plans yet to revise the bond issue target for this year, despite new government projection the state budget deficit would widen to 1.3 percent of GDP from the initial projection of 1.2 percent. The increase is likely because of higher state fuel subsidies amid soaring oil prices. -- JP