Govt caps year with Rp 500b bond sale
Govt caps year with Rp 500b bond sale
The Jakarta Post, Jakarta
The government has wrapped up its bond issuance program for this
year with the sale on Tuesday of Rp 500 billion (US$50 million)
worth of bonds.
The Ministry of Finance's Director General of the Treasury,
Mulia Nasution, said the 15-year bonds carried a weighted average
yield of 14.63 percent and were more than 5 times oversubscribed.
The yield is higher than the 11.59 percent on the Rp 1.05
trillion worth of bonds that the government had issued in June,
but lower than the 15.96 percent yield for the Rp 1.56 trillion
worth of 13-year bonds during its last bond sale in August.
"This is our last bond offering for this year," Mulia said.
"And the results were very satisfying, considering the fact
that 80 percent of the bidders were foreign investors."
In an open auction, the government received a total of Rp 2.69
trillion bids from investors requesting yields ranging from 14.59
percent to 17.5 percent.
The fixed-rate bonds would be payable twice a year in every
May and October, and would mature on Nov. 15, 2020, with a coupon
rate of 11 percent.
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 it B2, or five levels below investment grade.
Local currency bonds have declined in the past months, 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.
The government had planned a total of Rp 43.3 trillion in bond
issues this year to help plug the state budget deficit. Not all
of the proceeds of the bond sales will be used for the budget,
however, as the government will buy back Rp 21 trillion in bonds
as part of its debt rescheduling strategy.
With Tuesday's sale, the government has so far collected some
Rp 26 trillion in net bond sale proceeds, Mulia said, expressing
the hope that it would be able to a gain surplus of some Rp 800
billion by the end of the year.
Although it has wrapped up its bond sales for the year, the
government is expected to repurchase some Rp 3 trillion in bonds
next month.