Fin Min Seeks Fund US$11.09 Billion in Q3, Issues Eurobond US$2 Billion

Ministry of Finance Sri Mulyani Indrawati and his staff at the Parliament Meeting - Photo by Finance Ministry
JAKARTA (TheInsiderStories) – Finance Ministry has plans to issue Eurobond up to US$2 billion in this week, said one official. Based on Director General of Financing and Risk Management of the Ministry of Finance statement, Government set target to issue government bonds up to Rp147.5 trillion ($11.09 billion) in third quarter (Q3) of this year.
Based on the official page of the directorate general, the total indicative target includes the target of issuance of SPN 3 months and SPN-S 6 months each of Rp5 trillion and Rp2 trillion per auction. 
For the whole year, Director General Robert Pakpahan, said the ministry has target to raise Rp684 trillion, or equivalent to $51 billion for government bond issuance to finance the deficit target 2.91 percent in the State Budget for 2017.
Previously, in the first half of 2017, the government has issued government bonds through auction or non-auction amounting to Rp395.09 trillion or 57.69 percent of this year’s indicative target.
Of the total bond issuance during the first semester, the majority of issued are Government Bonds of Rp273.21 trillion or 69 percent. The remaining is Sharia bond totaling Rp121.88 trillion or 31 percent.
Investors’ interest in government bond issuance through auction in this period is quite high. Total demand submitted by investors reached Rp658.94 trillion. The demand is much higher than the same period of 2016, which amounted to Rp468.75 trillion.
Indonesian government has been selling conventional global debt of $3.5 billion and  global Sukuk $3 billion. Robert said, the number of global debt orders reached 4 times above the target set.
Government of Indonesia targets to issue global bonds worth $10 billion this year, equivalent Rp130 trillion, representing 20 percent of total target. While the issuance of global Sukuk is targeted for around Rp160 trillion equivalent or 29 percent of target this year.
He explained, that Government has no plan to buy back foreign bonds though current bond’s yield tend to lower, while current outstanding foreign bond carries a fixed rate coupon. Noting, the rating upgrade by S&P has benefited Indonesia, boosting the capital inflow (hot money) and reducing the debt risk.
The local currency, Rupiah, also gets stronger against the US dollar. Per June 21, the foreign bond portfolio in Indonesia reached Rp764.21 trillion, grew by 14.78 percent year to date.
Previously, Finance Minister Sri Mulyani Indrawati has said the benchmark yields of SBN have declined around 4 basis points following the rating upgrade by S&P, helping to reduce debt exposure. The stronger rupiah would also reduce debt. (EV)

The Profile of Government Bonds in Foreign Currencies:

Series RI0727 with a value of US$1 billion and a period of 10 years. Due July 18, 2027 with interest of 3.85 per year.

RI0747 Series with value of US$1 billion and 30-year term, Due on July 18, 2047 with interest 4.75 per year

RIEURO0724 Series with a value of 1 billion euros and a period of 7 years. Due July 18, 2024 with interest of 2.15 per year