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Yield for retail sukuk at 12%
The government's first retail sukuk will carry a yield of 12 percent, higher than the average return of comparable government bonds
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The government's first retail sukuk will carry a yield of 12 percent, higher than the average return of comparable government bonds.
Finance Ministry's director general of debt management Rahmat Waluyanto said Wednesday the 12 percent coupon had taken into account "the condition of the domestic financial market, and the cost that could be borne by the government in managing its debts".
"The coupon is also comparable to the yield of three-year government bonds," he said.
Rahmat made such a comparison because the government's first retail sukuk, coded SR-001, will have a three-year maturity.
The retail sukuk is aimed at individual investors, with a minimum purchase of Rp 5 million and its multipliers. There is no purchase limit.
Director of sharia financing Dahlan Siamat said the Finance Ministry did not set any certain target for the issuance of the retail sukuk.
"We do not set any limit (for the retail sukuk issuance), unlike the government's retail bonds," he said.
However, he added, the government could issue retail sukuk only up to Rp 13.6 trillion, based on the amount of the government's available underlying assets.
"It is the maximum amount, although we will not issue that much as we still want to issue global sukuk sometime this year," Dahlan said.
The ministry plans to issue global sukuk later on this year, taking into account market conditions.
Investors are now choosing safer financial instruments after the earlier collapse of the financial market.
"Amid the crisis, we have to carefully issue bonds so that it will not crowd the market out. We need to make the market confident in our bonds," Rahmat said.
He said the Finance Ministry decided to accelerate the issuance of retail sukuk as individual investors were in better position than institutional investors now.
"The crisis creates tight liquidity, which makes demand for bonds drop and yields rise. That is what happens to institutional investors," he said.
The retail sukuk issuance is expected to help plug the 2009 budget deficit, which may reach Rp 132 trillion, up from Rp 51.3 trillion set for the 2009 budget.
Terms and conditions
1.Date offered Jan. 30 - Feb. 20
2.Allotment date Feb. 23
3.Settlement date Feb. 25
4.Maturity date Feb. 25
5.Nominal value per unit Rp 1m
6.Price per unit 100% (at par)
7.Minimum purchased Rp 5m and multiplier
8.Maximum order -
9.Yield/coupon 12 percent per year
10.Payment period Date 25 every month
11.First coupon payment March 25, 2009
12.Investor target: Indonesian individuals
Source: Finance Ministry
