Moody's Investors Service has assigned Baa2 ratings to the proposed senior unsecured US Dollar notes to be issued by the Government of Indonesia (Baa2 stable) - Photo by the Ministry Office

JAKARTA (TheInsiderStories) – Indonesia plans to issue government bond around Rp825.70 trillion (US$5.69 billion) in 2019. This figure is lower than the amount in 2018 State Budget of Rp885.69 trillion, said the ministry on Monday (12/03).

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.

This year, the government has issued sovereign bonds in two foreign currencies US dollar and Euro, following the successful issuance of global and euro bonds in 2017,

According Finance Ministry senior official Loto Ginting, issuing dual currency bonds is another government effort to resolve the 2018′ State Budget deficit. She said, the financing strategy is aiming to meet the optimal financing cost and risk levels, supporting the development of financial markets, and improving transparency and accountability of management of financing policies.

Rating agency Moody’s Investors Service has assigned Baa2 ratings to the proposed senior unsecured dollar-denominated
notes to be issued by the Government of Indonesia (Baa2 stable) in this week.

The notes will rank pari passu with all of the Government of Indonesia’s current and future senior unsecured external debt. The proceeds of the notes are intended for general budgetary purposes.

The rating mirrors the Government of Indonesia’s long-term issuer rating of Baa2 with a stable outlook. Previously, Standard & Poor’s upgraded Indonesia’s sovereign rating to ‘investment grade’ in May 2017.

Based on finance ministry data, in November 2018, inflows through government bond recorded Rp35 trillion, up from Rp15.1 trillion in October 2018. It said, the potential for influx of foreign capital to the bond market is still quite large.

The flow of foreign capital flows shows strong confidence from global investors towards the resilience of Indonesia’s macro economy amid the continuing volatility of global financial markets.

This condition was supported by pre-emptive monetary policy in response to global and domestic challenges including the challenges of the current account balance deficit, as well as consistent and prudent fiscal policies.

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