“From the past retail saving bonds offered online, we saw a change in our investor profiles. New investors, especially millennials, dominated the purchase of the bonds. We are expecting the same thing will happen in this issuance,” the ministry’s financing and risk management director general, Luky Alfirman, said in Jakarta on Thursday.

Luky said the SBR007 bonds, which have a total value of Rp 2 trillion (US$142.5 million), were being offered with minimum and maximum purchases of Rp 1 million and Rp 3 billion, respectively, and could not be traded on the secondary market. The bonds will mature on July 10, 2021, but the ministry will allow an early redemption period from July 27 to Aug. 4 next year, he said.

He added that the bonds would bear a floating interest rate that would be adjusted in line with the developments of Bank Indonesia’s (BI) benchmark interest rate. However, the floating rate would be limited with a fixed floor rate of 7.5 percent per annum.

The SBR007 series’ floor interest rate is slightly lower than the 7.95 percent and 8.15 percent offered, respectively, by the last two series, SBR006 and SBR005.

Luky said the coupon rate payment would be made on the 10th of every month.

He said that after seeing the successful issuance of such debt instruments in the past, his ministry decided to add six new partners in distributing the retail bonds so that the partners consisted of 12 banks, six securities companies and two fintech companies.

The Finance Ministry has recorded a growing number of domestic retail investors, especially millennials, over the past few years.

Indonesian Central Securities Depository data shows that the number of single investor identification (SID) holders has consistently grown by double digits since 2016.

Last December, the depository recorded 1.62 million SID holders, 39.72 percent of whom were millennials under the age of 30.

According to the Finance Ministry, the number of investing millennials has been growing. The purchase of the last two retail bonds, SBR005 and SBR006, was dominated by investors of the millennial generation. Millennials dominated the purchase of SBR005 retail bonds, which were offered in January, by 50.61 percent and SBR006 bonds offered in April by 49.42 percent.

Luky said the government was planning to issue more retail bonds this year.

“We’re planning to issue 10 retail bonds that will be in the form of both conventional and sharia-compliant retail saving bonds, eight of which will be nontradable, and the other two will be tradable,” he said.

The aggressive issuance of retail bonds is in line with the government’s goal to make them account for 9 to 10 percent of this year’s gross government bond issuance target of Rp 825 trillion.

In the first half of the year, the government raised Rp 33 trillion from the issuance of retail bonds, which accounted for about 55 percent of the target of up to Rp 80 trillion.

Furthermore, Luky said, the issuance of all bonds was aimed at increasing domestic investors’ participation in financing the country’s expenditure, particularly for education. (nal)

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