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Thursday, January 14, 2010

RI global bond coupon deemed high: Oversubscription stood at US$4.5 billion

Thursday, 14/01/2010 00:00 WIB
RI global bond coupon deemed high
Oversubscription stood at US$4.5 billion

JAKARTA: RI global bond coupon of 5.87 percent is deemed too high in fear of giving burden to the company with such bond issuance scheme.

One of the companies considering the government coupon high is Pertamina which will issue bonds worth US$1-1.5 billion.

Bisnis resource said Pertamina should set higher coupon than the previous assumption following the issuance of government global bond worth US$2 billion.

"Global bond coupon issued by the government was out of expectation of the management of Pertamina so they should set above the government global bond coupon as the reference," he said yesterday.

Finance Director of Pertamina Ferederick ST Siahaan said global bond issuance scheme is on the run despite RI government global bond coupon is higher than that of the Philippines Government.

As to him, the company will not change the funding resources from bonds into bank due to its flexibility.

"We don't want to comment on the government global bond. But we should set higher coupon for the government global bonds."

Director General for Debt Management Rahmat Waluyanto said the coupon and yield of the government global bond issuance worth US$2 billion with 10 years tenure followed market mechanism.

"I am not sure there is company complaining about global bond coupon and yield offered by the government. I don't see any crowding out (of the bond issuance competition )," he said.

The yield of global bond is set at the level of 6 percent and price of 99.04 percent. As to Rahmat, the yield is still lower than the 10 years tenured bonds issued by the government since 2004 at 6.85 percent.

Tim Condon, head of Asia research in the ING Groep NV in Singapore, said the government lacked of accuracy in market reading so as to make higher yield.

Member of the Legislative's Commission XI Andi Rahmat also said the global bond yield is considered quite high.

Bloomberg data shows that global bond yield was 2.28 percent premium of the US Treasury notes with the same tenure and 20 basis points higher than global bonds sold by the Philippines government at the level of 5.67 percent.

Rahmat said the bond will mature in March 2020. The global bond here has oversubscribed 2.25 times or worth US$4.5 billion.

The possession allocation based on the investor including asset management is 69 percent , bank 14 percent, insurance company 11 percent, and individual investor 6 percent.

The bond issuance was assisted by Barclays Capital Plc, Citigroup Inc, and Credit Suisse Group AG. "Philippines got the benefit with one step ahead of Asia," said Cornel Bruhin, bond manager of Clariden Leu AG Zurich, as quoted by Bloomberg. (Bisnis/bpj/pul/rni/iaa)

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