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Indonesia raises 3 billion Euro for deficit financing


Photo by Finance Ministry

JAKARTA (TheInsiderStories) – Indonesia raises 3 billion euros (Rp45.21 trillion) of dual-trance eurobonds to fund a budget deficit, said government official. The bonds attracted orders more than twice that size with total book order for 8.36 billion euros. The bond sale was arranged by Barclays, Deutsche Bank, JP Morgan and Societe Generale.

“Investor of confidence on the Indonesian economy is high and at the same time there is a negative interest rate in Europe,” Robert Pakpahan, the ministry’s director general of financing and risk management for Finance Minister told The Insider Stories.
He added, the nation sold 1.5 billion euros of seven-year notes with yield 2.772 percent and 3.906 percent for 1.5 billion euros of 12-year tenure. Both are below the initial price guidance of as much as 280 and 345 basis points, respectively.

The government is now in talks with parliament to revise the 2016 state budget, which includes a bigger target for bond issuance to cover the swelling fiscal deficit.

Finance Minister Bambang Brodjonegoro has proposed to issue additional Rp20 trillion ($4.23 billion) of bonds to cover the widening of 2.48 percent as set in the Revised State Budget for 2016 (APBN-P) from 2.15 percent set previously. The amount of deficit was expanded to Rp313.3 trillion at the Revised State Budget from Rp273.2 trillion set earlier.

The government net bonds issuance was also set higher at Rp385 trillion or up from initial plan of Rp327.2 trillion and gross issuance of Rp576 trillion from previously set at Rp556 trillion. Pakpahan said 24 percent of the issuance would be in foreign currency.

The ministry will cover the remaining 19 trillion rupiah of the ballooning fiscal gap from the government’s extra cash.

Indonesia sold 1.25 billion euros of 10-year securities last year and got orders for 1.9 times the amount on offer. Its debut offering of 1 billion euros of seven-year notes in 2014 saw bids of 6.7 times.

The government sold $2.5 billion of US currency Islamic bonds (SUKUK) in March and received interest for $8.6 billion.

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Source: The Insiderstories
Indonesia raises 3 billion Euro for deficit financing

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