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.