Govt sets March 16 for second bond issue

Govt sets March 16 for second bond issue

The Jakarta Post, Jakarta

The government will launch its second bond issue this year on
March 16, worth around Rp 2 trillion (US$235.29 million), through
an open auction.

The bonds are expected to carry a fixed interest rate of 11
percent payable twice a year, due to mature in December 2012, a
press statement said on Tuesday.

If it materializes, it will be the second issue of domestic
bonds this year, after the government issued Rp 2.52 trillion
worth of bonds in February with a weighted average yield of 11.82
percent, which was 2.14 oversubscribed.

In the past two years or so, the government has been issuing
bonds to raise fresh funds to help plug the budget deficit. The
budget has been crippled by huge debt repayments -- primarily
domestic ones.

For that purpose, the government plans to issue Rp 28.5
trillion in domestic bonds this year, as against some Rp 11.7
trillion issued last year.

Throughout 2004, some Rp 21.5 trillion of bonds will mature,
including Rp 7 trillion that already matured last month.

Critics said that such a scheme, which in principle only
extends the maturity profile, does not resolve the chronic debt
problems -- but only moves them to future generations.