The government will offer its latest retail bond ORI007 in August with a yield that is more competitive than deposit rates offered by banks, the Finance Ministry says.
The yield on ORI007, targeted at individual investors, is 7.95 percent a year, the director general of debt management at the Finance Ministry, Rahmat Waluyanto, said via text message Tuesday.
“The issuance target indicated by selling agents is Rp 5 trillion [US$550 million],” he said.
ORI007 will be sold on Aug. 4. The minimum purchase will be Rp 5 million, with every unit worth Rp 1 million, the same amount as previous retail bonds offered.
Currently banks offer deposit rates at about 6 percent, which the government says would help drive demand for ORI007.
By purchasing ORI007, it says, investors could guard against inflation, which the central bank estimates at a maximum of 6 percent this year.
The directorate general of debt management also said ORI007 would be a safe instrument as it was guaranteed by the government.
Investors can purchase the bond through 23 banks and investment firms appointed by the government.
The banks include BCA, Mandiri, BNI, Panin, BII, CIMB Niaga, Citibank, Permata, Danamon, Standard Chartered, HSBC, BRI, OCBC NISP, Bukopin and Mega.
The investment firms include Danareksa Sekuritas, Trimegah Securities, Mega Capital Indonesia, OSK Nusadana Securities Indonesia, Ciptadana Securities, Reliance Securities, Lautandhana Securindo and Philip Securities Indonesia.
In August 2009, the government sold Rp 8.54 trillion of ORI006 to 24,433 investors in 33 provinces, with private-sector employees and entrepreneurs topping the list of buyers.
In February the government also sold Rp 8.03 trillion worth of its second retail Islamic bond, or sukuk, SR002.
The sales of retail bond and sukuk are expected to expand Indonesia’s bond market, Rahmat said.
The proceeds will also be used to plug the nation’s budget deficit this year of Rp 133.7 trillion, or 2.1 percent of GDP.
