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.