Govt to refinance maturing bonds

Govt to refinance maturing bonds

The Jakarta Post, Jakarta

The government will offer investors the chance to swap any bonds
maturing between 2006 and 2009 with those due in 2020 through an
open auction on Thursday, the Ministry of Finance said in a
statement on Wednesday.

The government will accept the lowest bids that bondholders
submit through 25 registered banks and securities firms during
the auction, which will be held by the Ministry of Finance from
10 a.m. to 1 p.m.

Winning bidders will be announced at 4 p.m.

Bondholders winning the bids will be entitled to buy the
government's FR0031 bonds, maturing on Nov. 15, 2020, at a price
of 79 cents a dollar and with a coupon rate of 11 percent.

The government did not specify how many bonds it intends to
repurchase and swap, or at what yield level.

Global credit rating agency Standard and Poor's assigns
Indonesia's long-term local currency debt a BB rating, which is
two levels below investment grade. Moody's Investors Service,
meanwhile, rates Indonesia's rupiah debt at B2, or five levels
below investment grade.

The government has been refinancing its bonds through buybacks
and maturity-extending swaps, as part of its efforts to
restructure Indonesia's bond portfolio, which between 2007 and
2009 is expected to reach its peak for maturing bonds.

During the period, the government may face the risk of having
to pay up to Rp 40 trillion in due bonds if they are not
refinanced.

From a total of Rp 43 trillion (some US$4.3 billion) in
revenues from bond sales that the government has planned for this
year, some Rp 21 trillion has been set aside for refinancing
efforts.

For next year, the government has earmarked Rp 24.9 trillion
in net revenues from bond sales to help finance the state budget
deficit.