JAKARTA (TheInsiderStories) – Finance ministry of Indonesia absorbed funds of Rp23.4 trillion (US$1.67 billion) from the auction of seven series of government bond from a total offer Rp41.76 trillion, said an official statement on Tuesday (04/23).

According to the Directorate General of Financing and Risk Management of the Ministry of Finance this achievement exceeded the initial target of Rp15 trillion. The seven auction series are SPN03190724 (new issuance), SPN12200106 (reopening), FR0077 (reopening), FR0078 (reopening), FR0068 (reopening), FR0079 (reopening) and FR0076 (reopening).

In addition, the value of the issuances in this auction shows a greater number than the previous auctioned on April 9 worth of Rp15.72 trillion. Its value is also still higher than the average value of issuance since the beginning of the year amounting to Rp23.11 trillion.

It said, for the SPN03190724 series, the nominal amount won reached Rp950 billion with a weighted average yield of 5.8 percent. The offer for bonds maturing on July 24 reached Rp2.4 trillion.

For the SPN12200106 series, the nominal amount won Rp2 trillion with a weighted average yield of 5.97 percent. The offering for bonds maturing on Jan. 6, 2020 reached Rp5,525 trillion.

While for series FR0077, the nominal amount Rp5.6 trillion with a weighted average yield of 7.08 percent. The incoming offer for bonds maturing on May 15, 2024 reached Rp10.09 trillion.

Furthermore, for the FR0078 series, the nominal amount won reached Rp6 trillion with a weighted average yield of 7.63 percent. The incoming offer for bonds maturing on May 15, 2029 reached Rp9.14 trillion.

For series FR0068, the nominal amount Rp4 trillion, with a weighted average yield of 8.06 percent. The incoming offer for bonds maturing on March 15, 2034 reached Rp278 trillion.

For series FR0079, the nominal amount won reached Rp3.9 trillion with a weighted average yield of 8.22 percent. The incoming offer for bonds maturing in 2039 reaches Rp6.26 trillion.

Finally, for series FR0076, the nominal amount won reached Rp950 billion with a weighted average yield of 8.47 percent. The incoming offer for bonds that are due on May 15, 2048 reaches Rp1.47 trillion.

This year, the government is targeting a net issuance of Rp389 trillion. In the second quarter of 2019, the government targeted the issuance of state bonds through an auction worth Rp129 trillion from 5 times the auction of state bonds and 6 times the state sukuk auction.

The purpose of government bond issuing is in line with government policies to control the State budget deficit and maintain the primary balance to remain under control. Therefore, the proceeds from the auction will be used to finance a portion of the budget structure that continues to experience a deficit.

The Ministry of Finance on Monday (04/22) reporter that in the first quarter of 2019 the realization of the deficit reached 0.63 percent of GDP and a negative primary balance of Rp31.4 trillion. To cover this, the government implemented a front loading strategy for securities issuance by utilizing liquidity early in the year and the high demand for investors.

In addition, the funds will also be used by the government to anticipate large debt obligations due in March to May 2019.

It is reported, until the first quarter, the position of government debt at 30.12 percent of GDP. While the realization of the government’s matured debt has only reached Rp 148.8 trillion, or around 38 percent of the total debt maturing in 2019 which amounted to Rp 382.47 trillion.

Overall, the position of government debt in March 2019 was Rp4,567 trillion, up from the debt position in February of Rp4,566 trillion. Then, the realization of government debt interest payments up to March 31, 2019 amounted to Rp70.58 trillion or 25.58 percent of the 2019 State budget

The amount lowered than the previous year which reached 28.69 percent of the state budget. The declined was mainly due to the stable yield of government bond and tended to decline at the beginning of 2019 compared to the upward trend in early 2018.

Written by Daniel Deha, Email: daniel@theinsiderstories.com