Indonesia?s Finance Ministry was trying to increase the size of its three-year bond sale by more than 8 percent on rising demand by Indonesian investors.
The last-minute move might have ended up raising Rp 13 trillion ($1.4 billion) by selling the Obligasi Retail Indonesia bonds to individual investors, Rp 1 trillion more than its original target of Rp 12 trillion.
?We can sell up to Rp 13 trillion?, said Robert Pakpahan, acting director general of the debt management office at the Finance Ministry. ?Friday was the last offering date so we hope that the increased target can be reached.?
The government offered the notes from Sept. 21 through Friday, with a planned listing on the Indonesian Stock Exchange set for Wednesday.
Robert said that there were 24,268 individual investors who placed bids for notes. Jakarta is represented by 11,586 individual investors. Western Indonesia, excluding Jakarta, has 10,998 investors, and central and eastern Indonesia have 1,684.
Robert said that individual investors from Jakarta submitted bids worth a combined value of Rp 6.4 trillion. Investors from the western part of the country bid Rp 5.2 trillion while investors from central and eastern Indonesia offered Rp 826 billion.
The government has set the coupon on the notes at 6.25 percent. The ORI?s coupon and par value payment are guaranteed by the state and investors can benefit from potential capital gains in the secondary market.
Unlike institutional investors from large investment banks, individual Indonesian investors are permitted to buy smaller parcels of bonds. An individual investor must bid at least Rp 5 million but cannot bid more than Rp 3 billion, according to Finance Ministry guidelines.
The government, which has been selling dollar- and rupiah-denominated bonds since 2002, wants to diversify funding and investors in the domestic bond market.
The government also wants to raise funds to plug the budget shortfall, which is forecast to reach Rp 190.1 trillion, or 2.23 percent of this year?s gross domestic product.
In the last retail bond sale, which took place in October 2011, the government raised Rp 8 trillion by selling the 7.956-percent bonds to individual investors. Back then, the government received Rp 8.4 trillion in bids from Indonesian retail investors, according to data from the Finance Ministry.
The government benefited from a ratings upgrade to investment grade by two international rating agencies: Moody?s Investors Service early this year, and Fitch Rating late last year.
An increase in purchasing power by many Indonesians have enabled the country?s citizens to buy bonds.
The Finance Ministry has named several banks and securities companies to handle the offering, including Bank Mandiri, Citigroup, Bank Rakyat Indonesia, Bank Negara Indonesia and Standard Chartered Bank.
The banks and brokerage firms act like selling agents for the government to market the notes and talk to individual investors. Some firms have gone to other regions of the country to lure investors.
Source: http://www.thejakartaglobe.com/business/government-increases-target-on-sales-of-ori-bonds/548475
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