Investors cold shoulder launch of treasury bonds on SSX
Investors cold shoulder launch of treasury bonds on SSX
JAKARTA (JP): No transactions have been made of the treasury
bonds launched on the Surabaya Stock Exchange (SSX) early this
month, an exchange executive said on Wednesday.
SSX president Anton Natakoesoemah said most investors still
considered the bonds unattractive for profit taking.
"Although several investors showed interest, their bids were
far below the face value of the bonds," he said.
Securities companies including Peregrine Sewu Securities,
Vickers Ballas Tamara and Indovest Securities have entered the
auction. But no single bond has so far changed hands because
banks, technically the owners of the bonds, would not accept
their low bidding prices.
Most of the bidders wanted to buy at maximally 85 percent of
the face value while the owners wanted to release them at par,
Anton said.
Bank Indonesia, starting on Feb. 2, allowed 12 local banks to
trade the treasury bonds issued by the government last year to
finance their recapitalization costs.
They are Bank Lippo, Bank Central Asia, Bank Danamon, Bank
Universal, Bank Artamedia, Bank Tiara, Bank Mandiri, Bank Bukopin
and four provincial administration-owned banks of East Java,
Aceh, North Sulawesi and Lampung.
The bonds to be traded include five-year bonds with a fixed
rate of 12 percent, and variable rate bonds maturing in 2002,
2003 and 2004.
The rate of the bonds maturing in 2002 is 11.40 percent, and
13.04 percent for those maturing in 2003 and 2004, the central
bank said in a statement.
The fixed income trading manager at SSX, Erna Dewayani, said
on Wednesday that the total value of the bids placed by the
investors since the initial listing early this month reached a
total of Rp 33 billion.
"Last week we had bids coming in almost every day at between
80 percent and 86.5 percent of the face value. But this week we
have seen no bids at all," she said.
She said investors appeared to be more interested in the fixed
rate bonds than floating rate ones.
"Practically all the bids were on the five-year maturity bonds
whose interest rates are fixed at 12 percent per annum."
A dealer at Indovest Securities said that his clients were
interested in the fixed-rate bonds because they predicted a
downward trend in the long-term interest rate, and secondly
because the benchmark used by the floating rate bonds was still
low.
Speaking on the condition of anonymity, he said that investors
would like to buy the bonds at a discount so they could gain an
effective yield higher than the coupon rate.
"The 12-percent-per-annum fixed rate bonds were attractive
enough but the rate was still seen as a little too low. That's
why investors placed their bids under par," he said, comparing
them to the 17 percent per annum fixed rate offered by the higher
risk corporate bonds.
"But we also understand that those recapitalized banks could
not sell at a discount because by doing so they would have to
book a loss, thus affecting their already tight equity balance."
Anton said the government should enhance its support of the
treasury bond trading.
He said the efforts should include finding a "market maker" to
kick start the bond trading until it found its own market
liquidity.
"In the meantime, we will do our best to facilitate the bond
trading while further promoting debt instruments, bonds, as an
alternative investment," he said.
Separately, Coordinating Minister for the Economy, Finance and
Industry Kwik Kian Gie said on Wednesday the government would
revise the structure of its bank recapitalization bonds if they
received a poor response in the secondary market.
"The government will have to revise (the bonds) if the market
demand is poor," Kwik said on the sidelines of a business
gathering.
"The government has to be creative."
He added that there were many options to be considered,
including extending the maturity of the bonds or limiting the
size of the secondary market issue.
"We have to admit that it was difficult to predict what the
market's response would be when we decided to launch 10 percent
of the bonds into the (secondary) market," Kwik said.
The government has so far issued Rp 282 trillion worth of
bonds to finance the recapitalization of the country's ailing
banks. The total recapitalization cost is expected to reach Rp
392 trillion.
For the first phase, the banks will be allowed to trade about
Rp 2.6 trillion worth of bonds, or about 10 percent of the bonds
issued to finance their recapitalization costs. (rei/udi)