Govt set for overseas roadshows to sell bonds
The Jakarta Post, Jakarta
The government will undertake a series of roadshows next month to a number of the world's major financial centers in a bid to gauge investor demand for its plan to issue sovereign bonds in March, Bank Indonesia senior deputy governor Anwar Nasution said on Monday.
Anwar's statement came amid reports that two investment banks had been chosen as the co-managers for the bond issue.
The government will officially announce the underwriters on Tuesday.
Bloomberg quoted unnamed sources as saying that Deutsche Bank and JP Morgan Chase & Co. would be the lead underwriters for the bond issue. The two are being selected from six investment firms competing for the underwriting job. The remaining four are Citicorp, Morgan Stanley and UBS, Securities and Credit Suisse First Boston (SCFB).
The report also mentioned that at least three local securities firms including PT Mandiri Sekuritas, PT Danareksa and PT Bahana Securities would be appointed to help the two global investment banks.
Anwar refused to confirm the name of the banks, and so did Minister of Finance Boediono -- both said that all would be officially made public as scheduled.
Anwar is a member of a government team tasked to prepare the bond issue.
On the roadshow plans, he said that it would start early in February to major financial centers which includes Hong Kong, London, Chicago, New York, San Francisco and Frankfurt.
He was optimistic about the investor demand for the bond issue.
"During the past non-deal roadshows, they (potential investors) were very enthusiastic," Anwar said.
"Even from last week's presentation. The underwriters were convinced that the bond would meet strong demands and be oversubscribed."
All six investment banks were last week optimistic that, given the relatively favorable economic condition at home and globally, the issue would be a success story. A rupiah that is stable relative to the weak U.S. dollar, benign inflation, declining central bank benchmark interest rate and a continued fiscal consolidation on the state budget, all reflect improvements in the economy.
They also suggested the government set the bond at a range of 7 to 10 years with a yield of 6 to 7 percent.
The upcoming bond issue will be the first since the 1997-1998 financial crisis, having issued its first global bond worth $400 million in 1996. Aside from the global bond, the government also plans to issue about Rp 28.5 trillion worth of bonds domestically this year.
The bonds were scheduled to be worth around US$400 million as an alternative source of funding to help finance the 2004 state budget deficit.
But, after the last successful overseas roadshows, the government is now considering an increase to $500 million.