Government starts selection of bond underwriters

The Jakarta Post, Jakarta

The Ministry of Finance started on Thursday the selection of underwriters for a planned international bond issuance, which will be the country's first sovereign bond issue since the late 1990s financial crisis.

Minister of Finance Boediono said that six underwriting firms participated in the first round of the two-day "beauty contest."

Some 15 investment banks and securities firms are reportedly competing for the underwriting job.

The government is expected to announce the winning underwriters on Tuesday. Director General of Financial Institutions Darmin Nasution heads the government team assigned to select the underwriters.

The government has said that it wanted to issue around US$400 million worth of international bonds this year to help finance the 2004 state budget as the country would no longer obtain a debt rescheduling facility from the Paris Club of creditor nations after graduating from the International Monetary Fund's bailout program late last year.

Boediono declined to comment on suggestions that the government should raise the size of the bond issue. During last year's non-binding overseas road shows, some institutional investors had suggested the government raise the size of the bond issue to around $1 billion, saying that investors could absorb the amount.

But he acknowledged that the size may change depending on developments in the international bond market.

Boediono has previously said that the issuance of the international bonds would take place during the first quarter of this year, prior to the start of the country's seven-month election process.

In addition to the international bonds, the government also plans to issue around Rp 28.5 trillion (US$3.39 billion) worth of domestic bonds.

Boediono also said that a larger portion of the domestic bonds would be issued in the first quarter of this year, a change from last year when a larger part of the bonds were issued in the latter part of the year.