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Wednesday, November 18, 2009

T-bond Issuance to be Suspended

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as published in Bisnis Indonesia daily newspaper
Wednesday, 18/11/2009 00:00 WIB
T-bond Issuance to be Suspended

JAKARTA: The government is going to suspend T-bond issuance this year as it has already met the target to raise IDR144.54 trillion in gross financing through the auction of three T-bond series worth IDR2.16 trillion.

Rahmat Waluyanto, Director General of Debt Management at the Department of Finance, revealed the government had been able to raise IDR2.16 trillion from the market through the issuance of T-bond series FR0031, FR0040, and FR0052 yesterday.

Although there was still 1.5 months left this year, there would be no more T-bond issued as the three series had been able to complete the fulfillment of the gross financing target of IDR144.54 trillion. "This is the last time since 100% of the target has been completed," he said yesterday.

At the T-bond issuance yesterday, the total bid received was IDR2.73 trillion. However, only IDR1.4 trillion was favored for the 11-year FR0031 series, IDR660 for the 16-year FR0040 series, and IDR104 billion for the 11-year FR0052 series.

In addition to rupiah-denominated bonds, the government has also issued three foreign-denominated bonds to patch up this year's deficit of IDR128.6 trillion or 2.4% of GDP. The three foreign-denominated bonds are global MTN (medium term notes) worth US$3 billion issued in February, global Islamic bond worth US$650 million issued in April, and Samurai Bond worth 35 billion yens issued in August.

Rahmat said the government was quite successful in its strategy of lowering yield by bolstering bond issuance earlier this year. "Such a measure enables us to control yield and prevent us from being controlled by the market."

Pursue target

An economist at the Institute for Development of Economic and Finance Aviliani viewed there had been an impression that the government only wanted to pursue financing target by bolstering bond issuances.

As a result, at the moment there had been competition for funds between the banking industry, which is facing liquidity problems, and the government, which offers huge yields.

An economist at Sustainable Development Indonesia Dradjad Hari Wibowo agreed, saying the maximum bond issuance was not matched by the parallel budgetary realization. As a result, there had always been budget left unabsorbed every year.

"The government's budgetary management is poor as the financing wheel doesn't match the wheels of spending and state revenues." (Bisnis/agi/21)

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