Indonesia to issue debt ‘Sukuk’for retail investors in 2012
JAKARTA, Nov 30
The Indonesian government will begin offering retail Islamic debt papers (sukuk) to individual investors in March 2012, after previous issuances drew strong interest, despite the shaky global financial market.
The Finance Ministry's Debt Management Office (DMO) on Monday began accepting applications from banks and brokerages to be sales agents for the government's fourth issue of Syariah-compliant bonds, English daily, The Jakarta Post, quoted DMO Chief Rahmat Waluyanto as saying.
Sales agents will be appointed on Jan 4 and the offering will be in March.
Government debt papers are attractive to individual investors because the return rates are higher than bank deposits. It also viewed as safe because of government guarantees.
In its last retail sukuk issuance in February, the Indonesian government raised Rp7.34 trillion (US$800.06 million) with an annual coupon rate of 8.15 per cent to be paid monthly, compared with a 6.75 per cent bank deposit rate guaranteed by the Indonesia Deposit Insurance Corporation (LPS).
The government's retail bond offerings have received strong demand from individual domestic investors, with the last sukuk issuance, exceeding its Rp6 trillion target.
Meanwhile the latest regular retail bond offering saw Rp20.35 trillion in bids, although the government ended up selling Rp11 trillion in debt papers.
The issuance of government debt papers, in the form of regular and sukuk institutional and retail bonds in rupiah and US dollar dominations, is a move to finance development projects and plug an estimated state budget deficit equal to 1.5 per cent of the country's gross domestic product (GDP).
The global financial market has been hit by high-level volatility in the stocks, bonds, and currency markets on international fund sell-offs over fears of a global economic slowdown on the eurozone debt crisis and the stalling United States economic recovery.
Rahmat has dismissed concerns on the retail sukuk issuance due to the shaky markets, saying that the retail market was relatively resilient to crisis, as the investors were individuals.