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Govt launches retail savings sukuk ST005, aiming to raise Rp 2t
The government aims to raise up to Rp 2 trillion (US$ 135.65 million) from ST005, which will mature in two years.
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Director of Bank Syariah Bukopin Harry Harmono Busiri (center) explains to a customer about the offer of a retail sukuk in Jakarta on Feb. 18, 2014. (Tribunnews.com/Herudin )
The government on Thursday officially opened the subscription period for non-tradeable retail savings sukuk (Islamic bonds) ST005, the seventh bond issued from 10 targeted issuances this year, it will be open until Aug. 21.
The government aims to raise up to Rp 2 trillion (US$ 135.65 million) from the debt papers, which will mature in two years. The savings sukuk has a minimum subscription of Rp 1 million and a maximum of Rp 30 billion.
It offers ST0005 with 7.4 percent annual yield, based on the current Bank Indonesia (BI) seven-day reverse repo rate - currently set at 5.75 percent - with a spread of 165 basis points (bps). The yield has the so-called “floating with floor” feature, which means that it will not go below the current rate even if BI lowers its policy rate.
Finance Ministry Financing and Risk Management Director General Luky Alfirman said the bond issuance plan was still on track despite uncertainties that plagued the market.
“We have anticipated the uncertainties by implementing a front-loading strategy,” said Luky, referring to the strategy of issuing more bonds as soon as possible when the market conditions are favorable to avoid high costs of funds.
After the issuance of ST005, the government is set to issue three more bonds, namely retail savings bonds SBR008 in September and retail savings sukuk ST006 in November. The government is also scheduled to issue government retail bond ORI016 in October.
