Govt to buy back debts, issue more bonds: Boediono
Govt to buy back debts, issue more bonds: Boediono
The Jakarta Post, Jakarta
The government plans to repurchase part of its domestic debts
in early September in a bid to reduce its interest payments,
Minister of Finance Boediono said on Tuesday.
He added that the government would also issue more bonds to
help plug the wider-than-projected deficit in this year's state
budget.
Speaking on the sidelines of a hearing with the House of
Representatives budgetary committee, Boediono said that Rp 72.7
trillion (US$8.5 billion) worth of bonds would mature between
Jan. 1, 2004 and Dec. 31, 2006.
"We will open another bid for investors soon to value our
bonds, but the amount of the bonds to be repurchased is yet to be
decided, depending on their bids," he said.
The government spent in early August about Rp 3.25 trillion to
repurchase part of the aforementioned bonds. The government had
initially allocated Rp 13.5 trillion for the repurchase of the
bonds, but due to the wider deficit, the budget was reduced to Rp
9.4 trillion.
The state budget has been heavily burdened by the payment of
interest on bonds totaling about Rp 450 trillion that were issued
in the late 1990s to bail out troubled banks.
To ease the interest burden, the government launched the debt
buy-back strategy.
The government will repurchase the bonds through an auction.
Boediono said that 19 local and foreign financial institutions
had been appointed as participants in the auction process. They
include Bank Central Asia, Bank Niaga, Bank Buana, Bank Danamon,
Bank Mega, Bank Lippo, Bank Panin, Bank Mandiri, BNI, BRI,
Citibank NA, HSBC, Deutsche Bank, Standard Chartered Bank, ABN
Amro NV, Trimegah Securities, Mandiri Sekuritas, Danareksa
Sekuritas and Bahana Securities.
Elsewhere, Boediono said the government had decided to
increase the size of its T-bonds issuance this year to Rp 11.7
trillion from the initial plan of Rp 7.7 trillion to cover the
wider deficit.
In April, some Rp 2.7 trillion worth of bonds had been issued.
The second issuance is expected to take place in early
September, Boediono said.
Apart from bolstering government finances, the T-bond sales
are intended to set a benchmark for corporate bond issuance and
help boost activities in the domestic bond market.
Eyebox
State bonds to be repurchased
Series Matures Coupon (%)
VR0004 25/01/2004 9,17611
VR0005 25/05/2004 9,06483
FR0001 15/09/2004 12,00000
FR0006 15/09/2004 16,50000
FR0007 15/09/2004 10,00000
VR0006 25/12/2004 10,18433
VR0007 25/04/2005 9,17611
FR0003 15/05/2005 12,00000
FR0008 15/05/2005 16,50000
FR0009 15/05/2005 10,00000
VR0008 25/11/2005 9,06483
FR0004 15/02/2006 12,12500
VR0009 25/03/2006 10,18433
VR0010 25/10/2006 9,17611
Source: Ministry of Finance