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s part of strengthening individual investors in Indonesia and plugging this year's budget deficit, the government now plans to sell its sixth retail bond (ORI006) in August, the Finance Ministry said on Wednesday.

"Our aim in issuing *the* retail bond is to attract bigger participation from individual investors, as government bonds *normally target* institutional investors," Rahmat Waluyanto, the ministry's director general of debt management, told a press briefing.

"Only Indonesian citizens are allowed to buy retail bonds. By strengthening domestic investment, we can prevent mass redemption *by foreign investors*, which can affect market stability," he added. The amount however is yet to be determined.

This year's budget deficit stands at Rp 139.5 trillion (US$13.47 billion), or 2.5 percent of the country's gross domestic product (GDP). The government plans to sell Rp 99.6 trillion in bonds, Rp 89 trillion of which have already been issued.

Finance Ministry's director of debt Bhimantara Widyajala said the government would offer ORI006 by the end of July, expecting to sell it in August.

ORI006 will be sold at Rp 3 million per unit, with a maximum purchase of Rp 3 billion, and have a three-year maturity, he said. The coupon has yet to be decided.

The government's previous retail bonds (ORI001, ORI002, ORI003, ORI004 and ORI005) are now 55 percent owned by individual investors, 25 percent by mutual fund agents, 13 percent by banks and 7 percent by foreign investors.

"To expand the secondary market, retail bonds cannot be held solely by individual investors. Therefore we issue retail bonds regularly to maintain supply in the market," said Bhimantara.

Although ORI005 sales plunged as the yield was less attractive than other offerings, the government remains optimistic ORI006 would attract investors.

The government last September sold Rp 2.71 trillion of ORI005, far below its target of Rp 6.23 trillion, while in March last year, the government secured Rp 13.46 trillion from ORI004, its all-time high.

ORI005 was offered with an 11.45 percent yield.

"Why is a retail bond interesting? There is no default risk, and the return is higher than (bank) deposit rates," Rahmat said.

By comparison Bank Mandiri, Indonesia's largest bank by assets, announced that rupiah-denominated deposit rates now vary between 6.25 percent and 7.25 percent, depending on the amount of deposits.