RETAIL FUNDS | Cesar Tordesillas, Indonesia

Indonesian govt offers lowest ever retail bond coupon rate

Indonesia's Finance Ministry launched the ninth series of its retail bonds, which would offer a 6.25 percent coupon rate.

Codenamed ORI009, the retails bonds will offer the lowest yield ever since the government started offering retail bonds in 2006.

The retail bonds the ministry sold last year, ORI008, offered a coupon rate of 7.3 percent and were almost two times oversubscribed. This year, although the bond’s coupon rate is at its historic low, the ministry expressed its optimism that the ORI009 would still be attractive to domestic investors, given the fact that it was still higher than yield offered by Indonesian banks’ deposit rates that currently stands at around 4 to 5 percent.

“Besides, there’s a sense of pride when you buy government bonds, knowing the money will be allotted to the country’s development. It's different when you put your money in banks because your money will go to private sector,” said Finance Ministry director general of debt management Robert Pakpahan.

The ministry has targeted to raise at least Rp 12 trillion or US$1.25 billion for the bonds to support government financing, Robert said. But there’s still room to upsize if there is a strong demand from the public.

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