Govt to issue new bonds on Nov. 4

The Jakarta Post, Jakarta

The government plans to issue Rp 2.5 trillion (US$297.62 million) in bonds on Nov. 4 in a bid to raise cash to help finance the 2003 state budget. This will be the government's third bond issue this year.

The bond is expected to mature on Oct. 15, 2010, and carries a fixed-rate coupon payable twice a year, according to a press statement from the Ministry of Finance released on Monday.

The government has plans to issue a total of Rp 11.7 trillion worth of bonds this year, of which the proceeds would be used to help refinance maturing government bonds.

Due to mature this year are Rp 55 trillion in bonds, part of the billions of dollars in bonds issued in the late 1990s to bailout ailing banks.

Previously, the bond issue this year targeted Rp 7.7 trillion, but the government has decided to increase the bond issue to Rp 11.7 trillion to anticipate a higher-than-expected budget deficit.

With Rp 6.7 trillion having been issued this year so far, the government still has Rp 5 trillion in bonds to issue.

In April, the government issued its first tranche of Rp 2.7 trillion, which will mature in 2011. The bonds carry a 12 percent fixed-rate coupon and was priced through an auction with a weighted average yield of 12.21 percent, succeeding on the back of strong demand from investors.

The second issue in September was less successful. While the target had been set at Rp 5 trillion, the last auction saw the sale of only Rp 3.99 trillion in bonds. The bonds carry a weighted average yield of 11.6 percent and are due to mature in December 2012.

The third bond issue, which was to have taken place this month, was delayed as the finance ministry wanted to be better prepared to avoid a similar failure as the second issue.

Elsewhere, the statement also said that the auction, to be organized by Bank Indonesia, would begin at 10.00 a.m. and close at 12.00 a.m.