Indonesia plans to issue diaspora and sustainable development goals bonds in 2020, as part of the government bond issuances program - Photo: ING

JAKARTA (TheInsiderStories) – Indonesian government has raised ¥177 billion (US$1.62 billion) funds from six series of Samurai bond sales, finance ministry reported today (05/16). This make the Indonesia become the biggest issuance of such bonds by an Asian country.

Ministry of Finance (MoF) sold the Japanese-currency-denominated bonds with 3 to 20-year maturities that have a range of coupons of 0.54 per cent to 1.79 per cent per annum. Joint lead arrangers for the transaction were Daiwa Securities, Mizuho Securities, Nomura Securities and SMBC Nikko Securities, it added.

Previously, the MoF has issued Samurai Bonds of ¥100 billion in 2018, equal to the issuance of previous year. The notes consists of four series RlJPY0521 mature 2021, RlJPY0523 mature 2023; RlJPY0525 mature 2025, and RlJPY0528 mature2028, with a value of respectively ¥49 billion, ¥39 billion, ¥3.5 billion, and ¥8.5 billion.

Each series has a coupon rate of 0.67 percent, 0.92 percent, 1.07 percent, and 1.27 percent.

Indonesian government has potential to issue bonds around Rp388.96 trillion ($27.20 billion) in this year. The government estimated will issue a total gross government bond of 50-60 percent throughout the first semester of 2019, which includes retail government bond, foreign exchange government bond and regular government bond instruments. The total issuance value is around Rp128 trillion.

Finance ministry recorded the realization of the net government bonds issuance in the first quarter of 2019 reached Rp185 trillion and SUKUK issuance reached Rp81.44 trillion. Totally, the bonds issuance value reached Rp266.44 trillion.

The Directorate of State Debt Management at the Directorate General of Financing and Risk Management of the MoF stated that the total gross bonds reached Rp330.1 trillion in 1Q 2019. This value reached 39.98 percent of the bonds issuance target throughout 2019 worth Rp825.7 trillion.

In fourth quarter of 018, the government recorded 8 series of government bond with a total value of Rp12 trillion. However, this achievement is still in line with the projection set in 2019 State Budget, which so far is still on track because foreign and domestic interests are still quite favorable looking at Indonesian instruments, said a senior official at the end of last month.

At present, government bond listed in IDX are 100 series with a nominal value of Rp2,504.01 trillion and $ 400 million, while Asset Backed Securities are 10 emissions worth Rp9.32 trillion. While, the government bond maturing throughout the 1Q of 2019 was recorded at Rp148.1 trillion. This value reached 38 percent of the total maturing debt throughout 2019 worth Rp382.4 trillion.

Recently, the directorate general Luky Alfirmansaid said the ministry seek alternate funding channels in responding the rising of country’ bond yields due to current global situation. In recent months there has been turmoil in financial markets such as the depreciation of the Rupiah against U.S dollar which is almost simultaneously with the rise in global oil prices.

Initially this condition had a negative impact on the market of Government bond due to the tendency of investors to avoid risk. To anticipate fluctuating financial market conditions and impact on potential yields and unfavorable Government bond auction results, the ministry has prepared alternative sources of financing through additional withdrawal and private placement, as well as opening options to increase the portion of foreign currency financing.

The government has also run Crisis Management Protocol to manage risks in the government bond market and prepare Bond Stabilization Framework scheme to mitigate the impact of sudden reversal by involving the related state-owned enterprises.

Indonesia needs foreign money to help bridge funding gaps in the government’s ambitious plans for new infrastructure across a nation of more than 250 million people. This year, the government also has other options to secure State budget financing such as loans from multilateral agencies or private placement.

US$1: JPY109.46,

by Linda Silaen, Email: linda.silaen@theinsiderstories.