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February 24, 2009

Indonesia plans more bonds to boost budget
Indonesia raised more than expected in its first retail sharia-compliant bond issue, or sukuk, and said it will go ahead with plans to sell global bonds, global sukuk and yen-denominated bonds.

The finance ministry has said it plans to borrow a net 85.6 trillion rupiah ($7.16 billion) in 2009 to fund its budget deficit, which is forecast at 136.9 trillion rupiah, or 2.6 percent of GDP. It aims to tap a wide array of debt investors.

The government has also announced agreements for multilateral and bilateral standby loans to fund the budget deficit if market conditions turn even more difficult.

Sharia-compliant debt, or sukuk, is intended to capitalise on demand for such products in the world's most populous Muslim nation.

The three-year retail sukuk raised 5.556 trillion rupiah ($465 million) or more than three times the expected amount, and will mature on February 25, 2012.

The finance ministry plans to issue regular Islamic-compliant bonds with a maturity of five years or more to help finance the state budget.

It has also announced plans to raise $500 million to $1 billion from a global sukuk, but the deal has been delayed due to the difficult market conditions.

Indonesia's finance ministry plans to issue yen-denominated bonds, possibly in the middle of 2009.

The government of Japan has said it will help Indonesia to issue up to $1.5 billion of Samurai bonds and the two nations will double their bilateral currency swap arrangement to $12 billion from $6 billion previously.

Indonesia has said it plans to sell a global bond, denominated in dollars, as part of its MTN programme under which is can raise up to $4 billion.

It has appointed Barclays Capital and UBS as the underwriters for its global bond issue.

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