Indonesia May Sell Bonds Overseas Next Year, Finance Chief Says
Indonesia May Sell Bonds Overseas Next Year, Finance Chief Says
Rob Delaney and Stephen Engle Bloomberg/Tianjin, China
Indonesia will sell bonds overseas in 2006 provided there's sufficient demand for the nation's debt, Finance Minister Jusuf Anwar said in an interview.
Officials are planning a promotional tour, tentatively scheduled for next year, to gauge what type of offering would be best received, Jusuf said on Saturday in an interview in the Chinese coastal city of Tianjin, east of Beijing. He declined to say how much the government would like to raise, adding that the denomination of any bond sale has still to be decided.
"I have to explore whether it would be in euros or U.S. dollars, but I prefer U.S. dollars because most of our export earnings are in U.S. dollars," he said.
"We achieved more than double the offer of subscriptions within 36 hours" of offering $1 billion of 10-year debt in April.
The government, which is predicting a US$2.1 billion budget deficit this year, is finding favor with investors as its credit ratings improve and the nation's economic growth picks up. Morgan Stanley predicts the $222 billion economy will expand 5.4 percent this year after growth reached an eight-year high of 5.1 percent in 2004.
Standard & Poor's in December lifted the nation's long-term foreign-currency rating one level to B+, four levels away from investment grade.
Indonesia is also considering selling Islamic bonds next year, Jusuf said, speaking ahead of the Asia-Europe Meeting of finance ministers from the European Union and Asia, which is being held on Sunday.
"Certainly the appetite is there," for Islamic debt, the minister said. "We have to tap it."
In October 2002, the House of Representatives approved the Government Debt Securities Law, providing a legal basis for the sale of domestic and overseas debt and the development of a government bond market. The law doesn't include provisions for the government to sell Islamic debt, according to the finance ministry's Website.
The government is studying the legal framework needed for it to sell bonds to overseas investors that comply with the Koran's ban on interest payments, Jusuf said.