Govt plans to issue new bonds

Govt plans to issue new bonds

The Jakarta Post, Jakarta

The government will issue a total of Rp 5 trillion (US$602
million) worth of medium-term bonds in two batches in the next
six months, a senior official at the Ministry of Finance said on
Thursday.

"We'll (issue the bonds) in two stages. The first in the
third quarter of this year, and the second in the fourth
quarter," head of the state bonds management center Fuad Rahmany
told reporters.

"We must not issue the bonds all at one time in huge amounts
because the market requires orderliness. We'll follow principles
prevailing in the market."

He declined to reveal the exact date of the issue, saying it
would be announced by Minister of Finance Boediono.

The bond issue is part of the government's strategy to
refinance bonds due to mature this year.

The refinancing scheme is aimed at managing the country's huge
domestic debts, all in the form of government bonds, so as to
secure a sustainable fiscal condition.

This year, the government must pay Rp 14.84 trillion in
maturing debts that it owes to local banks and to the central
bank.

Of this amount, Rp 7.37 trillion will be paid using proceeds
from the sale of assets held by the Indonesian Bank Restructuring
Agency (IBRA).

It is the remainder that the government plans to refinance.

In April, the government issued Rp 2.7 trillion worth of
bonds, which was three times oversubscribed.

Analysts have said investors both at home and overseas were
attracted to the government bonds because they offered better
returns compared to other investment alternatives.

The increasingly stable macroeconomic condition in the country
has also lured foreign money to the government bonds.

Elsewhere, Fuad said that the government plans to buy back
some Rp 13.5 trillion worth of bonds set to mature in 2004 and
2005.

He said that the buyback would be made gradually starting this
year.