Bond Market Indonesia: Government Starts Selling Conventional Retail Bonds Today

In order to tackle an estimated shortfall of more than IDR 260 trillion (approx. USD $17.5 billion) in the 2015 State Budget, the Indonesian government starts selling government bonds to Indonesian retail investors today (21/09). In the original 2015 State Budget the government projected a deficit of 1.9 percent of the country’s gross domestic product (GDP). Recently, this figure was raised to 2.23 percent of GDP due to disappointing tax revenue amid weak economic growth.

Indonesia’s Finance Ministry said the coupon on the three-year government retail bonds (ORI012) was set at 9 percent, 125 basis points higher than the 7.75 percent on time deposit interest guaranteed by the Deposit Insurance Agency (LPS) and higher than the 7.50 percent key interest rate of Bank Indonesia (BI rate). The retail bonds will be sold until 15 October 2015. Banks and securities companies that assist the sale include Bank Central Asia, Bank Mandiri, Bank Negara Indonesia, Bank Tabungan Negara, and Danareksa Sekuritas.

It is the 12th conventional bonds issuance for retail investors. Since the first launch in 2006, the Indonesian government has already issued 11 ORI bonds (Obligasi Negara Ritel Indonesia). ORI is issued specifically for Indonesian retail investors/individuals. Besides ORI, the government also issues other instruments to attract retail investors i.e. the Retail Sharia Government Bond (Sukuk Negara Ritel, or, Sukri), savings bonds and government bonds (Surat Utang Negara, or, SUN) for the domestic market. So far, ORI bonds have been warmly welcomed by investors as can be seen in the table below.

Indonesian ORI Bond Series:

 ORI   Year
    Coupon (%)    Maturity Date
 Investment
(in trillion)
   Number of
   Investors		      New
  Investors
 001   2006         12,05      08-08-2009   IDR 3.28      16,561     16,561
 002   2007          9,28      28-03-2010   IDR 6.233      13,158     10,372
 003   2007          9,40      12-09-2011   IDR 9.367      22,837     16,692
 004   2008          9.50      12-03-2012   IDR 13.455      37,724     26,089
 005   2008         11,45      15-09-2013   IDR 2.71      14,001     10,983
 006   2009          9,35      15-08-2012   IDR 8.54      24,433     14,601
 007   2010          7,95      15-08-2013   IDR 8.0      17,705     10,959
 008   2011          7,30      15-10-2014   IDR 11.0      15,372     10,410
 009   2012          6,25      15-10-2015   IDR 12.68      25,293     16,107
 010   2013          8,50      15-10-2016   IDR 20.2      38,860     26,824
 011   2014          8,50      15-10-2017   IDR 21.2     +35,000          -

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