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NEWS UPDATES Asean Affairs     25 October  2011

Indonesian bonds attract investors

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The Indonesian government’s latest debt offering has attracted significant interest from local investors, with Rp 20.4 trillion (US$2.3 billion) in bids being received from Indonesian citizens.

“We offer a major apology that we cannot take all bids from investors. Demand was more than double [the debt on offer],’’ said Rahmat Waluyanto, director general of the debt management office at the Ministry of Finance.

Rahmat said the government sold Rp 11 trillion worth of three-year bonds in an issue targeted at Indonesian retail investors. The government, which offered the notes from Oct. 7-21, set the coupon of the securities at 7.30 percent, 30 basis points higher than the rate guaranteed by the Deposit Insurance Agency (LPS).

Bhimantara Widyajala, a director at the debt management office said that 15,372 individual investors submitted bids for notes, known as Obligasi Retail Indonesia.

According to the government’s guidelines, individual investors were able to bid for parcels ranging from Rp 3 million to Rp 5 billion. Bhimantara said 10,410 investors were first-time bidders.

In the government’s last retail bond issue, in August last year, it sold Rp 8 trillion in bonds yielding 7.95 percent. The government received Rp 8.4 trillion in bids from 17,000 retail investors.

Dino Nunuhitu, a fixed income trader at Indo Premier Securities in Jakarta, said demand for the latest offering showed Indonesian investors’ strong appetite for the bonds. He said a possible upgrade of Indonesia’s credit rating lifted sentiment.

Ratings agencies including Moody’s and Standard & Poor’s earlier this year raised their rating on Indonesia to one notch below investment grade.

Bhimantara said that with the latest debt sale, total gross bond sales this year reached Rp 182 trillion. The government has set a target of Rp 211 trillion in gross debt sales this year.

Several banks, including Bank Mandiri, Citigroup, Bank Rakyat Indonesia, Bank Negara Indonesia and Standard Chartered Bank helped the government in selling the bonds.

The government has sold dollar and rupiah-denominated bonds since 2002.

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