Govt buys back Rp 2.45 trillion in bonds, plans another issue
The Jakarta Post, Jakarta
The government bought back Rp 2.45 trillion (some US$245 million) worth of treasury bonds on Monday, ahead of a planned offering of some Rp 500 billion in bonds on Tuesday.
The government repurchased a total of eight series of local- currency bonds, the Ministry of Finance said in a statement, with maturity dates ranging from 2007 to 2009.
It had received offers to buy back as much as Rp 13.1 trillion of the bonds from 11 national private banks, six foreign banks, five securities firms and three state-owned enterprises.
Among the bonds the government bought back were Rp 692 billion worth of bonds maturing on Feb. 25, 2007, at a yield of 9.94 percent, Rp 600 billion in bonds maturing July 15, 2007, at 13.34 percent, Rp 422 billion in bonds maturing April 15, 2007, at 13.37 percent and Rp 290 trillion in bonds maturing July 25, 2009, at 13.91 percent.
The government has planned a total of Rp 43.3 trillion in bond issues this year to help plug the state budget deficit, including the sale of $1 billion of dollar-denominated bonds in April and $1.5 billion earlier this month.
Not all of the proceeds of the bond sales will be used for the state budget, however, as the government will use part of the proceeds to buy back as much as Rp 21 trillion in bonds as part of its debt rescheduling strategy.
Following the success of the $1.5 billion bond sale earlier this month, the finance ministry's Director General of the Treasury Mulia Nasution said the government planned to repurchase another Rp 5 trillion in bonds by the end of the year.
After Monday's buyback, the government will likely repurchase some Rp 3 trillion in bonds next month.
"Exactly how much in bonds we will buy back, however, still depends on the results of the Oct. 25 bond offering," Mulia said.
Rating agencies still designate Indonesia's bonds as high- risk, high-yield junk bonds.
Standard & Poor's rates Indonesia's long-term, rupiah debt BB, or two levels below investment grade, while Moody's Investors Service rates them B2, or five levels below investment grade.
Local currency bonds have declined in the past month, driving yields higher, after the central bank raised its benchmark BI Rate by 2.5 percentage points to 11 percent over the past three months, to contain inflation and defend the rupiah.