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China shows growing interest in Indonesian bonds
China has expressed interest in purchasing Indonesian bonds as part of the countryâs efforts to strengthen its role in the emerging debt markets
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hina has expressed interest in purchasing Indonesian bonds as part of the country's efforts to strengthen its role in the emerging debt markets.
The two countries' high-ranking officials held a bilateral meeting over the weekend on the sidelines of the G20 Finance Ministers and Central Bank Governors Meeting in Ankara, Turkey.
The meeting was attended by Indonesian Finance Minister Bambang Brodjonegoro, Bank Indonesia (BI) Governor Agus Martowardojo and People's Bank of China (PBOC) Governor Zhou Xiaochuan.
Bambang said that China had shown commitment to investing in the Indonesian government's bond market to expand its financing role in the emerging debt markets.
'Investing in the bond market of an emerging economy like Indonesia is not what China does regularly. It usually invests in US treasury bills or in other advanced economies,' Bambang said.
'So this is something new to them, including its participation in our regular biweekly auction. It is more used to the US bond market procedures, with more frequent auctions,' he added.
He said that a specific target for the value of debt papers that China intended to purchase had not been set, adding that the counterpart was still carrying out an assessment and developing its own procedures to help explore Indonesia's market.
China ' which is represented by the PBOC ' has so far participated twice in the bond auction and bought US$150 million-worth of government debt papers.
'We hope China will participate more frequently with a higher purchase value, but we do understand that it will probably take a while,' Bambang said.
The Indonesian government has set this year's gross and net securities issuances at Rp 452.18 trillion ($31.77 billion) and Rp 297.7 trillion, respectively. By Aug. 21, it had issued around Rp 281.13 trillion-worth of dept papers, both in the rupiah and foreign exchange (FX) denomination, as shown by data from the ministry's financing and risk management office (DJPPR).
The data also revealed that incoming bids from foreign investors usually revolved at between 31 percent and 34 percent of total bids per auction.
Bambang said that the meeting did not discuss the potentials of Indonesia's planned renminbi bonds, but acknowledged that the ministry would continue with its assessment.
As reported earlier, the government is looking into the possibility of issuing renminbi-denominated bonds ' popularly known as 'dim sum bonds ' as part of its attempt to diversify instrument options and widen its investor base.
Loto Srinaita Gining, director of the government bonds at the DJPPR, previously said that it had not set a specific timetable for the issuance of the bonds, adding that the assessment would take several months to complete.
If the plan is realized, the dim sum bonds will be added to the list of FX bonds that the government has issued, namely in US dollars, euro and yen.
