Government won't cancel bond issue: Official

Government won't cancel bond issue: Official

The Jakarta Post, Jakarta

The government will proceed with plan to issue between Rp 2
trillion (US$215.05 million) and Rp 3 trillion worth of bonds
later this month despite the latest major bombing.

"The plan is still on track," Herwidayatmo, a member of the
government's bond management committee, told reporters on Friday.

A suicide car bomb exploded outside the Australian Embassy on
Thursday, killing at least nine people and injured more than 180.
The stock market and the rupiah plunged following the incident,
although both stocks and the local unit quickly recovered.

Herwidayatmo was also optimistic that investor interest on the
government bonds, to be put on auction on Sept. 28, would remain
high.

The government is expected to decide on the size of the bonds
next week.

Some analysts said although many investors now realize that
terror attacks are part of the risk of investing in financial
markets in countries like Indonesia, the latest incident would
prompt investors to ask for higher yields in the upcoming bond
auction.

In May, the government canceled a sale of Rp 3.5 trillion
bonds because investors demanded overly high yields at a time
when many investors switched to dollar-based assets because of
the expected rise in U.S. interest rates.

Last month, the government issued Rp 3 trillion bonds at a
weighted average yield of 11.74 percent.

The government, via the Ministry of Finance, plans to issue
bonds monthly to raise a total Rp 28 trillion this year mainly to
finance maturing bonds, which were issued during the late 1990s
to bailout ailing banks.