JAKARTA (TheInsiderStories) – Indonesia plans to issue diaspora and sustainable development goals (SDGs) bonds in 2020, as part of the government bond issuances program, the official told local media yesterday (12/16). Next year, the finance ministry also wants to cut back its retail bond issuance after a sharp weak sales in 2019.
In 2020, Indonesia plans to raise Rp735.52 trillion from the bond market. As reported, the country doubled the number to 10 times this year, with an aim to raise Rp80 trillion (US$5.71 billion) from 2018 sold Rp46 trillion. The planned was intended to reduce the government’ reliance on foreign funds.
Based on the ministry data, the government Just raised Rp49.9 trillion from its 10 retail bond offerings. 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.
Las October, the government sold dual-currency bonds worth of $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 have coupon 3.70 percent with yield 3.75 percent, while the Eurobond has yield 1.412 percent and coupon rate 1.400 percent. This bonds received ratings 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 2019 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 tightening 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 bonds issuance for each 6 bps.
Indonesian government plannned to issue government bond around Rp825.70 trillion ($58.98 billion) in 2019. This figure is lower than the amount in 2018 State Budget of Rp885.69 trillion.
The decline is in line with the government planned to lowering the amount of the debt in 2019. Based on the official statement, the net issuance in 2019 is predicted worth of Rp359.25 trillion, down from the figure in the 2018 State Budget of Rp399.18 trillion.
For the deficit financing, in 2019, Indonesia will also receive loan assistance from several multilateral partner institutions, such as the World Bank, the Asian Development Bank, which is intended for the development of natural disaster affected areas in Lombok and Central Sulawesi.
The government also continues to find innovative ways of the financing through the issuance of retail bond with online formats or other creative financing models. Issuance of online retail bond is conducted with the consideration of increasing domestic investor participation, in line with the strategy to reducing foreign ownership and foreign currency debt.
Further innovations by the government include providing special access for micro-finance institutions and, Small and Medium Enterprises, philanthropic institutions including waqf fund management through Waqf Linked Sukuk instruments. The government also plans to continue publish Green Sukuk.
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