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New retail bond issue aims to raise $712m for economic recovery, COVID-19 vaccines
With Indonesia’s debt-to-GDP ratio forecast to increase to 40 percent this year, the government is planning to raise Rp 1 quadrillion through sovereign bond issues.
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Stock illustration of Rp 100,000 banknotes (Shutterstock.com/Maciej Matlak)
T
he government is looking to raise Rp 10 trillion (US$711.6 million) from a new series of domestic retail bonds to fund the country’s fiscal deficit and COVID-19 vaccination program, the Finance Ministry announced on Monday.
“The proceeds will be used to fund the pandemic handling and economic recovery [efforts] including the mass vaccination [program],” financing and risk management director general Luky Alfirman of the Finance Ministry said during the launch of the new bond issue on Monday.
The ORI019 bond series has a fixed coupon rate of 5.57 percent per annum and a three-year tenor, with a maturity date of Feb. 24, 2024.
The retail bond is available to buy online from Jan. 25 to Feb. 18 and is open to purchase by Indonesian individuals for a minimum investment amount of Rp 1 million and a maximum investment amount of Rp 3 billion. The bond series is tradable on the domestic secondary market starting on April 15.
The fixed coupon rate is “very attractive” for retail investors, as bank interest rates remained relatively low during the coronavirus pandemic, head of fixed income research Handy Yunianto at Mandiri Sekuritas told The Jakarta Post on Monday.
“Although the coupon rate is lower than its predecessor, ORI018, but the spread of ORI019 to the deposit rate and Bank Indonesia’s seven-day reverse repo rate is higher than ORI018,” he said, noting that the government’s target was realistic despite the current economic downturn.
The government plans to issue six retail bond series this year, starting with the ORI019, after raising Rp 76.93 trillion through the issuance of seven retail bond series last year.
