Govt hires 5 foreign firms to handle bonds issuance

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.