The government expects to raise up to Rp 6 trillion (US$672 million) from its second yen-denominated bonds offering, which will officially be issued next week.
Finance Minister Agus Martowardojo said in Jakarta on Tuesday that the proceeds from the so-called Samurai bonds, to be officially offered on Nov. 2, would be used to finance the deficit in the current state budget, which is forecast to reach Rp 133.7 trillion.
Agus said the second-round Samurai bonds would have a maturity of seven years.
The government issued its first Samurai bonds, with a maturity of 10 years, worth a total 35 billion yen ($382.1 million) in July last year, offering coupons with an annual yield of 2.73 percent.
The finance minister did not reveal the coupon rate for the second round of Samurai bonds. But he said that “this time, the bonds are more efficient given improvements in the country’s sovereign rating”.
He said the Japan Credit Rating Agency had raised in June its credit rating for Indonesia to investment grade (BBB-). The upgraded credit rating would no doubt reduce the costs of the bond offering, he added.
Both the first and second samurai bonds are guaranteed by Japan Bank for International Cooperation (JBIC), which has promised to guarantee Indonesia’s Samurai bonds worth up to $5 billion to help the country cope with its budget deficit.
This year’s budget deficit is projected to reach Rp 133.7 trillion ($14.57 billion), or 2.1 percent of the gross domestic product (GDP), according to the 2010 revised state budget. In the 2011 state budget, the budget deficit is projected to reach Rp 124.7 trillion, or 1.8 percent of the GDP.
Meanwhile, Bloomberg reported that 10-year government bonds dropped for a sixth straight day on Tuesday, the longest declining streak since August, as investors prepared for additional supply following a government auction.
The yield on the note due November 2020 rose four basis points or 0.04 percentage points to 7.24 percent, according to mid-day prices at the Inter Dealer Market Association. The rate slid to 7.02 percent on Oct. 14, the lowest level since the note was issued in 2005.
Indonesia sold a total of Rp 3.2 trillion ($359 million) in 5-, 10- and 15-year bonds Tuesday, Rahmat Waluyanto, director general of the finance ministry’s debt management office, said in a text message. The government received total bids worth Rp 13.43 trillion at the auction.
On Tuesday, the rupiah weakened 0.1 percent to 8,913 against the dollar as of 3:40 p.m. in Jakarta. (est)
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