Govt hires 5 foreign firms to handle bonds issuance
Rendi A. Witular, The Jakarta Post, Jakarta
The government has appointed three foreign financial institutions as joint managers and two others as arrangers for the government's massive dollar-denominated bonds issue planned for February or March.
The three lead managers are Deutsche Securities, Citigroup Inc. and UBS AG, while JP Morgan Chase & Co. and Credit Suisse First Boston (CSFB) will be acting as comanagers for arranging the sovereign bond issues worth between US$1.5 billion and $2 billion.
"We have decided to hire the five companies for arranging our bonds. We expect to submit the bonds in late February or early March," said Mulia Nasution, the Ministry of Finance's director general for state treasury, at his office on Monday.
The bonds, which will be the government's third global bond issue, are aimed at financing the state budget deficit this year. Based on the state budget, the government is expected to issue a total of Rp 43 trillion (US$4.7 billion) worth of bonds to the local and overseas market this year.
Earlier in the day, Minister of Finance Yusuf Anwar said the government was hopeful that the interest rates for the bonds would be lower with longer maturing period following a decision by Fitch Ratings to upgrade the country's ratings.
Fitch last week upgraded Indonesia's long-term foreign and local currency ratings to BB- from B+, and affirmed its short- term rating at B, both with positive outlooks. The rating remains two-levels from the investment grade of BBB-.
"The upgrade is just in time for our plan to issue the bonds... Our burden to pay interest costs for the bonds will be reduced, and at the same time it will improve our access to the international financial market," he said at the State Palace.
At present, he went on, the government was only considering dollar-denominated bonds, because other currencies, such as the euro, were considered too risky, due to fluctuation against other currencies.
Elsewhere, Yusuf also said the government could not submit a planned revision to the 2005 state budget to the House of Representatives as the ministry had not yet received new budget requirements from other ministries and state agencies.
"We haven't received any proposal for revising the state budget from other state institutions. We need to receive that before we decide to redraw the budget," he said, adding that the ministry was hopeful that the revision could be carried out this semester.
The 2005 budget was drafted by the administration of former president Megawati Soekarnoputri and was endorsed by the previous House late last year.
Key assumptions that would be revised by the current government, include the oil price, subsidy allocations, inflation and the rupiah exchange rate.