Indonesia may offer dollar- denominated
conventional and Islamic bonds targeted at local
investors this year, seeking to curb price swings
caused by capital outflows.
“In the next issuance of global bonds, we might
want to increase the allocation for domestic
investors, or we might issue entirely in the
domestic market, ” Rahmat Waluyanto, director-
general of the Finance Ministry’s debt
management department, said in an interview in
Jakarta yesterday. “We need to be vigilant as this
can cause some potential risks, especially if there
is any trigger to market volatility. ”
Dollar debt of Southeast Asia’s largest economy
has handed investors a gain of 13.8 percent in
2010, tying with the Philippines as third-best in
the region after Thailand and Pakistan, indexes
compiled by HSBC Holdings Plc show. Indonesia
plans to sell 200.6 trillion rupiah ($22.1 billion) of
local and foreign debt in 2011 to fund a budget
deficit estimated to reach 124.7 trillion rupiah, 1.8
percent of gross domestic product.
The government may not offer rupiah bonds to
global markets, unlike neighboring Philippines
which has already sold peso bonds twice
overseas in the past four months, said
Waluyanto. The increase in foreign ownership of
rupiah government bonds to 30.8 percent as of
Jan. 10 from 0.5 percent in 2003 is a
consideration, he said.
Unfriendly Policy
The foreign-currency bonds to be offered this
year will include dollar conventional and Islamic
bonds, which may be issued within the first half,
and samurai securities in the second half, he said.
Islamic bonds, known as sukuk, comply with
Shariah law by using asset returns to pay
investors instead of interest.
The country raised nearly $3 billion of global
securities last year, including $2 billion of dollar
bonds and 60 billion yen ($721 million) of samurai
notes denominated in Japan ’s currency. The
amount sold was lower than the $4 billion in
2009. The government usually sets aside 5
percent of the overseas bonds for local investors
to buy, Waluyanto said.
“We can’t prohibit foreign investors from buying
our bonds,” Waluyanto said. “This is unfriendly
market policy. Instead, we need to
counterbalance by developing our own domestic
investor base by diversifying instruments. ”
Indonesia’s rupiah debt returned 21 percent last
year, the top gainer among 10 Asian government
debt markets compiled by HSBC. The currency
rose 4.6 percent.
Dollar Liquidity
Foreign ownership in the government’s domestic
debt increased 87.76 trillion rupiah last year to
195.76 trillion rupiah, according to the finance
ministry.
“The spirit is to give more opportunities to
domestic investors given that the liquidity in the
U.S. dollar is quite big because of the heavy
capital inflows,” Waluyanto said.
Standard & Poor’s raised the country’s rating in
March to BB, while Moody’s Investors Service on
Dec. 1 placed its Ba2 ranking on review for a
possible upgrade, citing an improving economy
and state finances. Both rank Indonesia two levels
below investment grade. Fitch Ratings assessed
Indonesia at BB+, the highest non-investment
ranking.
President Susilo Bambang Yudhoyono said in his
annual state-of-the-nation address on Aug. 16
that he is seeking to expand the Indonesian
economy by as much as 7.7 percent and create
10.7 million jobs by the end of his second term in
2014.
Source: Http://www.bloomberg.com/news/2011-01-12/indonesia-may-sell-dollar-debt-aimed-at-local-market-to-curb-price-swings.html
conventional and Islamic bonds targeted at local
investors this year, seeking to curb price swings
caused by capital outflows.
“In the next issuance of global bonds, we might
want to increase the allocation for domestic
investors, or we might issue entirely in the
domestic market, ” Rahmat Waluyanto, director-
general of the Finance Ministry’s debt
management department, said in an interview in
Jakarta yesterday. “We need to be vigilant as this
can cause some potential risks, especially if there
is any trigger to market volatility. ”
Dollar debt of Southeast Asia’s largest economy
has handed investors a gain of 13.8 percent in
2010, tying with the Philippines as third-best in
the region after Thailand and Pakistan, indexes
compiled by HSBC Holdings Plc show. Indonesia
plans to sell 200.6 trillion rupiah ($22.1 billion) of
local and foreign debt in 2011 to fund a budget
deficit estimated to reach 124.7 trillion rupiah, 1.8
percent of gross domestic product.
The government may not offer rupiah bonds to
global markets, unlike neighboring Philippines
which has already sold peso bonds twice
overseas in the past four months, said
Waluyanto. The increase in foreign ownership of
rupiah government bonds to 30.8 percent as of
Jan. 10 from 0.5 percent in 2003 is a
consideration, he said.
Unfriendly Policy
The foreign-currency bonds to be offered this
year will include dollar conventional and Islamic
bonds, which may be issued within the first half,
and samurai securities in the second half, he said.
Islamic bonds, known as sukuk, comply with
Shariah law by using asset returns to pay
investors instead of interest.
The country raised nearly $3 billion of global
securities last year, including $2 billion of dollar
bonds and 60 billion yen ($721 million) of samurai
notes denominated in Japan ’s currency. The
amount sold was lower than the $4 billion in
2009. The government usually sets aside 5
percent of the overseas bonds for local investors
to buy, Waluyanto said.
“We can’t prohibit foreign investors from buying
our bonds,” Waluyanto said. “This is unfriendly
market policy. Instead, we need to
counterbalance by developing our own domestic
investor base by diversifying instruments. ”
Indonesia’s rupiah debt returned 21 percent last
year, the top gainer among 10 Asian government
debt markets compiled by HSBC. The currency
rose 4.6 percent.
Dollar Liquidity
Foreign ownership in the government’s domestic
debt increased 87.76 trillion rupiah last year to
195.76 trillion rupiah, according to the finance
ministry.
“The spirit is to give more opportunities to
domestic investors given that the liquidity in the
U.S. dollar is quite big because of the heavy
capital inflows,” Waluyanto said.
Standard & Poor’s raised the country’s rating in
March to BB, while Moody’s Investors Service on
Dec. 1 placed its Ba2 ranking on review for a
possible upgrade, citing an improving economy
and state finances. Both rank Indonesia two levels
below investment grade. Fitch Ratings assessed
Indonesia at BB+, the highest non-investment
ranking.
President Susilo Bambang Yudhoyono said in his
annual state-of-the-nation address on Aug. 16
that he is seeking to expand the Indonesian
economy by as much as 7.7 percent and create
10.7 million jobs by the end of his second term in
2014.
Source: Http://www.bloomberg.com/news/2011-01-12/indonesia-may-sell-dollar-debt-aimed-at-local-market-to-curb-price-swings.html
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