The government starts offering savings bond retail (SBR) series SBR009 today (01/27) with an indicative target of Rp14,04 trillion (US$1.00 billion) - Photo: Privacy.

JAKARTA (TheInsiderStories) – The government starts offering savings bond retail (SBR) series SBR009 today (01/27) with an indicative target of Rp14,04 trillion (US$1.00 billion). Investors can order SBR009 products with a minimum order of Rp1.00 million and a maximum order of Rp3.00 billion.

The Director-General of Financing and Risk Management said the offer period would end on February 13. The determination of sales results would be announced on February 17, order settlement date on February 19, and due on February 10 (2-year tenor).

Purchases are made through banks and financial technology platforms that are distribution partners. For every SBR009 unit purchase, investors receive a coupon of 6.3 percent to be paid on the 10th of every month.

The coupon is determined based on a reference interest rate of 5 percent with an additional 130 basis points. The government debt instruments cannot be traded again and can only be disbursed during the initial disbursement period, 24 February 2021 to 4 March 2021.

Reportedly, the SBR will be issued in January, February, and June for the first half of 2020. Then, the rest will be issued in August and two instruments simultaneously in October. The first series is the SBR009 and SBR010. Then, retail sukuk series SR012. Next, savings sukuk series ST007 and ST008. Finally, retail government bonds series ORI017.

The retail state securities instrument that will mature next year is Rp23.01 trillion. In detail, the SR009 series with a value of Rp14.04 trillion which will mature on March 10. Then, the ORI014 series with a value of Rp8.97 trillion that will mature on October 15. This figure is lower than Rp51 trillion due in 2019.

This year, the government also plans to issue diaspora and sustainable development goals (SDGs) bonds, as part of the government bond issuances program. The finance ministry also wants to cut back its retail bond issuance after a sharp weak sales in 2019.

The government plans to raise Rp735.52 trillion from the bond market this year. The plan was intended to reduce the government’s reliance on foreign funds. Based on the ministry data, the government has raised Rp49.9 trillion from its 10 retail bond offerings in 2019. Luky Alfirman, director general at the finance ministry said, the government considering to reduce the number of issuances to only eight times in 2020 with indicative targets up to Rp60 trillion.

Last October, the government sold dual-currency bonds worth $2.1 billion. In US Dollar’ denominated (RI1049) the values $1 billion with 30-years tenure and in Euro-denominated (RIWUE1031) worth of EUR1 billion ($1.11 billion) with tenure 12 years.

The US Dollar bond has coupon 3.70 percent with yield 3.75 percent, while the Eurobond has yield 1.412 percent and coupon rate 1.400 percent. These bonds received rating Baa2 from Moody’s Investor Services, BBB by Standard & Poor’s, and BBB by Fitch.

Affirman revealed, this issuance was intended to anticipate the potential widening of the state budget deficit is estimated 2.2 percent of gross domestic products (GDP), as the implementation of counter-cyclical policy to respond to domestic and global economic conditions, while maintaining the performance of the reception and quality of spending.

For the issuance of US Dollar Bonds, the final price guidance tightened up 35 basis points (bps) from the initial price guidance. As for Euro happen to tighten up 30 bps from the initial price guidance. This tightening over the yield level and the issuance of Euro Bonds and US Dollar Bonds is lower than the fair value of the yield of the issuance of the bond for every 6 bps.

US$1=Rp14,000

Written by Lexy Nantu, Email: lexy@theinsiderstories.com