Govt to soon name global bond's lead underwriters

Govt to soon name global bond's lead underwriters

The Jakarta Post, Jakarta

The government is pressing ahead with its sovereign bonds
issue plans, saying it had received proposals from 14 investment
banks to underwrite the issue and would name the lead
underwriters in less than two weeks.

"We'll decide on the lead underwriters by Jan. 20,"
Herwidayatmo, a member of a government team assigned to prepare
the issue, was quoted as saying by Dow Jones on Friday.

None of the 14 were mentioned, but the news agency cited
Citicorp, HSBC, Deutsche Securities, J.P. Morgan, ING, Morgan
Stanley and UBS as likely candidates.

The government is planning to issue bonds worth some US$500
million on the international market this year as an alternative
source of funding to help finance the 2004 state budget deficit,
estimated to be 1.2 percent of the country's gross domestic
product (GDP) this year.

The state budget initially set the figure at $400 million, but
the government has increased the size due to higher demand than
earlier expected for the bonds. The decision was made after the
government claimed it had received positive responses from
international investors during two overseas roadshows last year.
It is the first bond issue by the government since the 1997
financial crisis.

There is now speculation that the government might increase
the size of the issue to up to $1 billion due to the strong
demand.

Investors' interest in Indonesia has been on the rise lately
given the country's slowly-but-steadily improving economy,
notably its newfound stability in several key macroeconomic
indicators.

A rupiah that has stabilized relative to the weak dollar,
benign inflation and declining trend in the central bank's
benchmark interest rate have managed to improve the country's
sovereign ratings.

Late last year, international rating agency Fitch Ratings
upgraded the country's sovereign rating with a stable outlook,
citing improving economic stability. It was followed by similar
moves by Moody's and Standard and Poor's (S&P) Rating Service.

Although the country's rating remains below investment grade,
the move should be seen as a vote of confidence in the economy.

The government is making strenuous efforts to seek as many
sources of funds to chip away at its massive deficit this year as
the government ended the International Monetary Fund (IMF)
program in December.

Exiting the program makes the country ineligible for the debt
rescheduling facility from the Paris Club of creditor nations and
the London Club of private creditors, meaning that the government
must now fully repay any maturing sovereign debts.

Additional pressure on the state budget will also come from a
maturing government domestic debt, estimated at Rp 24.7 trillion
for this year alone.