Govt to issue Rp 2.5t worth of bonds on Dec. 16

The Jakarta Post, Jakarta

The government is set to undertake its fourth and final bond issue this year, worth around Rp 2.5 trillion, on Dec. 16 to help finance this year's state budget.

A press statement from the Ministry of Finance revealed on Thursday that the bond would mature on Oct. 15, 2010, and carry a fixed-rate coupon of 12 percent to be payable twice a year.

The bond issue is part of the Rp 11.7 trillion in bonds the government has pledged to issue to help refinance part of the huge tranch of the government's domestic debt that matures this year. There are some Rp 55 trillion worth of bonds maturing this year.

In its first three bond issues, conducted in April, September and November, the government has issued a total of Rp 9.2 trillion worth of bonds.

The government initially planned to issue a total of Rp 7.7 trillion worth of bonds this year, but it later decided to increase the volume because of its larger financing requirements.

The state budget has been weighed down by the payment of maturing government bonds totaling about Rp 450 trillion that were issued in the late 1990s to bail out troubled banks.

To ease that burden on the cash-strapped state budget, the government has launched more bonds to refinance the maturing ones.

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

Anggito Abimanyu, head of the ministry's fiscal analysis body, said the government would target companies such as insurance firms and pension funds as the main investors for the bonds.

He did not provide further details.