Government starts selection of bond underwriters

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.