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The government said Monday it planned to sell more bonds to
retail investors this year and to launch its first treasury bills and
sharia bonds in a bid to restructure the funding of the budget deficit.
Retail bonds will likely be issued in two series, and with longer
maturities, in March, June and November.
However, orders will be restricted to a maximum of Rp 5 billion
(US$526,325) per investor, the Finance Ministry's director of debt
management, Rahmat Waluyanto, said.
The government issued a total of Rp 3.28 trillion in retail bonds last
year, which were bought by 17,403 investors, with the selling price
being Rp 1 million per unit. The bonds carried a 12.05 fixed rate. The
government initially planned to issue only Rp 1 trillion-worth of
retail bonds.
The coupon rate for this year's retail bonds has not been set yet, but
Rahmat promised it would be competitive.
He said that over the next three years, the number of retail investors
in government bonds would equal that of stock-market investors. "I hope
to expand the number of retail bondholders to 300,000," he said.
The government has so far issued a total of Rp 480 trillion in bonds.
In an effort to diversify its deficit-financing sources, the government
will also issue its first treasury bills in April, July and September.
The issuance of the treasury bills, which will have shorter maturities
that the retail bonds, will make the government's cash management more
efficient, Rahmat said.
He added that the government hoped the House of Representatives would
deliberate the sharia bond bill by August at the latest so that
Indonesia could issue Islamic bonds in September. The government would
be able to issue the bonds three months after the passing of the bill
into law.
To boost transparency and the participation of individual investors,
the government would trade all types of bonds it had issued on the
stock market this year.
Another strategic step to be taken by the government in developing its
bond management this year would be the creation of a primary-dealer
system in which qualified financial-sector firms would be appointed as
primary dealers and partner to the government for the purpose of
enhancing bond liquidity on the secondary market.
"They will be the closest partners to the government in selling
government bonds on the primary and secondary markets," Rahmat said,
adding that the system would make bond issues and debt switches more
efficient.
Banks and securities firms that are eligible to operate as primary
dealers must be listed as participants in government bond auctions for
more than a year.
They are also required to have minimum capital of Rp 1 trillion in the
case of banks, and net adjusted capital of Rp 200 billion in the case
of securities firms.
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