Govt mulls increasing global bond plan

The Jakarta Post, Jakarta

Minister of Finance Boediono said on Friday that the government may increase the size of its international bond issue next year from the original plan of US$400 million following an upgrade in the country's sovereign rating.

He said that the rating upgrade would help reduce the cost of the bond issue.

"The rating upgrade will affect the size of the bond plan," Boediono told reporters.

He declined to provide details as his office was still discussing the plan. Some officials, however, have previously said that the issue could be increased to around $600 million.

International rating agency Fitch Ratings on Thursday upgraded the country's sovereign rating to B+ from B with a stable outlook, citing improving economic stability. Although the country's rating remains below investment grade, the move should be seen as a vote of confidence in the economy.

Boediono was hopeful that the country's rating would continue to rise in the coming months if the economy continues to improve and no significant negative development occurs.

"We must maintain the current positive development (in the economy)," he said.

The government has planned to issue international bonds in the first quarter of next year to help finance the state budget. It will be the government's first bond issue in the international market since the late 1990s financial crisis.

During international road shows in Singapore and Hong Kong earlier this week, institutional investors suggested the government raise the bond issue up to $1 billion.

Officials from the Ministry of Finance and Bank Indonesia met also with international rating agencies during the road show.

Meanwhile, Bank Indonesia Governor Burhanuddin Abdullah said the rating upgrade would cut the interest spread of the bond issue, thus lowering the burden on the state.

"This is an encouraging development. Hopefully, there will be another upgrade in December," he said.