Indonesia’s Finance Ministry has set the coupon on its next three-year bond sale, aimed at individual retail investors, at
The retail bonds (Obligasi Retail Indonesia) and par value payments are guaranteed by the state, and investors will be able to benefit from potential capital gains in the secondary market.
The government will began offering notes on Friday and will do so through Oct. 5. It plans to list them on the Indonesian Stock Exchange on Oct. 10, the Finance Ministry stated on its website.
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 ($524) but not 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.
Indonesia last sold retail bonds last October. The government sold Rp 8 trillion of bonds to individual investors in 2010 at 7.95 percent. The government received Rp 8.4 trillion in bids from Indonesian retail investors, according to the Finance Ministry.
The government did not set the size of the upcoming bonds because that will be dependent on the demand by the investors.