Govt to delay bonds issuance: Boediono

Govt to delay bonds issuance: Boediono

The Jakarta Post, Jakarta

Minister of Finance Boediono said on Friday that the government
will delay the planned issuance of treasury bonds (T-bonds) from
October to early November.

"It (the issuance) will be made in November," he said, adding
that the ministry would hold a meeting later in the day to
discuss the matter.

The government initially planned to issue around Rp 5.7
trillion worth of T-bonds in two stages starting October as part
of efforts to raise cash to finance this year's state budget
deficit.

In April, the government issued around Rp 2.7 trillion in T-
bonds. The issue was a success, with huge interest shown by
investors. But a second issue in September was disappointing amid
insufficient demand. The government was forced to cut down the
size of the issuance to Rp 3.99 trillion from the initially
planned Rp 5 trillion.

Analysts attributed the lackluster demand to the long-term
maturity profile of the bonds. The bonds, carrying a weighted
average yield of 11.6 percent, are due to mature in December
2012.

Against the backdrop of the last issue, the government needs
to change the maturity profile of its bonds in order to attract
investors, analysts have said.

Bank Indonesia agreed, saying that investors might view long-
term bonds as less attractive because they carry a higher risk
than short-term bonds.

A long-term maturity profile causes less burden on the state
budget as the government has more time to prepare payments for
the bonds.

The state budget has been heavily burdened by the government's
obligation to pay-out on maturing bonds -- issued in the late
1990s to bail out troubled banks -- ammounting to about Rp 450
trillion.

Boediono said that although the next bond issue will be
delayed, the size will not be altered and the issue will still be
made in two stages before the end of this year.

The government will also rely on bonds to help finance next
year's state budget, particularly as -- with the termination of
the existing International Monetary Fund economic bailout program
-- the country is no longer eligible to use debt rescheduling
facilities from the Paris Club of creditor nations.

Next year, the government intends to issue around Rp 28
trillion worth of T-bonds in the domestic market and another Rp
5.3 trillion worth of international bonds.