Govt to launch Rp 3.5 trillion bonds
The Jakarta Post, Jakarta
The government will issue a seven-year bond on May 25 through an open auction -- the fourth batch of bonds it has issued this year.
The bonds are worth about Rp 3.5 trillion (about US$397 million) and carry a fixed-rate coupon of 10 percent with a seven-year maturity profile, the Ministry of Finance said on Monday.
"A coupon will be payable twice a year on Oct. 15 and April 15," it said. The proceeds of the issue would go into the government's coffers to help plug the 2004 state budget deficit.
The auction, to be conducted by the central bank, will take place between 10 a.m. and 12 a.m., with the results to be announced in the afternoon.
The upcoming issue would bring the government's total bond issue to Rp 11 trillion so far this year. The first issue was in February, worth some Rp 2.5 trillion, with the second and third were in March and April worth Rp 2 trillion and Rp 3 trillion, respectively.
All previous bond issues drew strong demand from investors and were oversubscribed.
In the past years, the government has been issuing bonds to raise fresh funds to help finance the budget deficit. Its financing ability has been heavily burdened by huge payments of debts -- mostly domestic ones.
For this year, the government is planning to issue some Rp 32.5 trillion worth of bonds, including the recent issue of some US$1 billion of global bonds. The figure is an increase compared to the Rp 11.7 trillion of bonds issued last year.
In contrast, the 2004 state budget has set aside Rp 41.3 trillion to service the interest payments on domestic debts, excluding close to Rp 25 trillion for domestic bonds maturing throughout the year.
If combined, not only is the figure higher than the full-year bond issue, it also represents 86 percent of the budget's spending allocation.
During and after the banking crisis, the government issued a total of Rp 445 trillion of recapitalization bonds to bail out troubled banks. It is the interest payments on these bonds that make up the largest of the government's domestic debts.