Investors favor short-term fixed income instruments

JAKARTA (JP): Lehman Brothers Asia Limited of the United States has discovered that institutional investors in Indonesia favor short-term fixed-income instruments.

Lehman Brothers' vice president and head of credit research, Stephen M. Taran, said in a presentation here yesterday that 61 percent of its respondents invested in short-tern certificates of deposits.

About 51 percent of the respondents said that they also put their investments in commercial papers, he said.

Taran said the survey involved 112 institutions holding total investible assets of US$75 billion.

The survey also revealed that Indonesian investors use a wide variety of currencies. "This indicates that liberalization of capital flows has opened Indonesia to global investment opportunities as evidenced by currencies held and type of instruments used," he said.

He said 84 percent of the 112 surveyed institutions said they used the U.S. dollar, while 76 percent use the rupiah, 37 percent the Japanese yen. The Singapore dollar and the German mark came an equal fourth, with 32 percent of responding institutions saying they used the currencies.

Twenty-one percent of the institutions use the British pound, 16 percent the Hong Kong dollar and 15 percent the Australian dollar, he added.

Of the bond investors, 77 percent preferred to have their savings instruments denominated in rupiah, 12 percent in the U.S. dollar, eight percent in the yen and three percent in other currencies, he said.

Rupiah

Taran said the survey also showed that rupiah-denominated instruments were held by investors in 12 Asia-Pacific countries.

Rupiah-denominated instruments were held by 30 investors from Singapore, 22 from Japan, 18 from Australia and 14 from Hong Kong, he said.

He said Lehman Brothers was focusing its survey on Indonesian investors because of its liberal regulations on external capital flows, rapid growth, wealth accumulation spread over a large population and active involvement of the government in promoting the development of savings institutions.

He said 48 percent of the surveyed institutions were corporate treasuries, 24 percent banks, 19 percent brokerage, leasing, real estate and public sector financial institutions, six percent insurance companies and three percent investment management firms.

A group of 15 professionals were involved in the survey.

Lehman Brothers was the co-lead manager for the international securities offering of PT Kalbe Farma (raising US$100 million from its dragon bond issue), co-lead manager for PT Indosat's initial public offering (generating US$1.1 billion in capital), and is an adviser to the Paiton power project in East Java. (kod)