ASIA: Indonesia’s government bond offered at the lowest rate

Finance Ministry of Indonesia recently issued a government retail bond (ORI) offered at 5.85% per coupon per year – the lowest in ORI selling history. The auction period for this low rate bond has started and will end by 19th Oct.

Considering that the bond has been priced at the lowest rate, there has been some concern from financial experts on whether the government can achieve a target of selling IDR 20 million (US 1.5 billion).

However, Ministry of Finance representatives have clarified that the government is not worried about under subscription since there are other funding sources fund from the market that are available. Issuing global bonds to generate funds are in the pipeline following the government’s preparation to auction 8 government debt paper (SBN) this year.

The government has appointed 18 underwriters to issue this ORI by involving major local banks such as BCA, Mandiri, BNI, BRI as well as international banks such as DBS and Citibank.

According to RFi Group, there has been a decline in appetite to invest among banked customers in Indonesia in the past six months. The issuance of such type of discounted bonds should prove to be attractive for investors.

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