By Adriana Nina Kusuma
JAKARTA, March 23 (Reuters) - Indonesia's finance ministry raised 7.475 trillion rupiah ($820 million) in a debt auction on Tuesday, beating a target of 5 trillion rupiah as investors bet on benign inflation and a stable monetary policy.
Strong foreign capital inflows for the high-yielding assets also helped boosted demand for the paper. Foreign investors have recently stepped up buying relatively cheaper, longer-dated bonds on hopes of more foreign exchange gains and prospects of an investment grade rating in coming years.
For details of the auction results, please click
The finance ministry also said it plans to raise 1 trillion rupiah from sales of Islamic debt, or sukuk, next Tuesday, proceeds of which would be used to finance the budget deficit.
'Investors expect inflation to remain benign in the coming months,' one Jakarta-based fixed income trader said.
Indonesia's central bank reiterated on Monday that interest rates were likely to remain unchanged at a record low of 6.5 percent this year owing to the absence of inflationary pressures.
Traders said bond prices in the secondary market were largely unchanged on Tuesday.
'The cutoffs are in line with our expectations and prices are unchanged from earlier,' said a local trader.
Among longer-dated bonds, the 20-year FR0052 was priced to yield 10.40975 percent in the auction. Bank Danamon had expected the yield within a 10.31-10.47 percent band.
The one-year treasury bill was priced to yield 6.88197 percent in the auction, at the higher end of the expected yield range of 6.78-6.9 percent.
For a graphic of relative value in Indonesia bonds, see
http://r.reuters.com/xyt74j
Ten-year bond yields have fallen nearly a full percentage point in the past month, owing in part to foreign investment inflows and also reacting to a central bank plan to gradually reduce the amount of one-month bills (SBIs) it issues.
The finance ministry planned to raise 176.2 trillion rupiah of debt this year to repay maturing bonds and help plug a budget deficit.
Finance Minister Sri Mulyani Indrawati said last month she expected the budget deficit to reach 2.1 percent of gross domestic product this year, up from 1.6 percent forecast in the state budget, due to higher fuel and electricity subsidies.
(Reporting by Adriana Nina Kusuma and Saikat Chatterjee in Hong Kong; Writing by Gde Anugrah Arka; Editing by John Stonestreet)
((ga.arka@thomsonreuters.com; Reuters Messaging: ga.arka.reuters.com@reuters.net; +62 21 384 6364 ext 911)) Keywords: INDONESIA ECONOMY/BONDS (If you have a query or comment on this story, send an email to news.feedback.asia@thomsonreuters.com) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
JAKARTA, March 23 (Reuters) - Indonesia's finance ministry raised 7.475 trillion rupiah ($820 million) in a debt auction on Tuesday, beating a target of 5 trillion rupiah as investors bet on benign inflation and a stable monetary policy.
Strong foreign capital inflows for the high-yielding assets also helped boosted demand for the paper. Foreign investors have recently stepped up buying relatively cheaper, longer-dated bonds on hopes of more foreign exchange gains and prospects of an investment grade rating in coming years.
For details of the auction results, please click
The finance ministry also said it plans to raise 1 trillion rupiah from sales of Islamic debt, or sukuk, next Tuesday, proceeds of which would be used to finance the budget deficit.
'Investors expect inflation to remain benign in the coming months,' one Jakarta-based fixed income trader said.
Indonesia's central bank reiterated on Monday that interest rates were likely to remain unchanged at a record low of 6.5 percent this year owing to the absence of inflationary pressures.
Traders said bond prices in the secondary market were largely unchanged on Tuesday.
'The cutoffs are in line with our expectations and prices are unchanged from earlier,' said a local trader.
Among longer-dated bonds, the 20-year FR0052 was priced to yield 10.40975 percent in the auction. Bank Danamon had expected the yield within a 10.31-10.47 percent band.
The one-year treasury bill was priced to yield 6.88197 percent in the auction, at the higher end of the expected yield range of 6.78-6.9 percent.
For a graphic of relative value in Indonesia bonds, see
http://r.reuters.com/xyt74j
Ten-year bond yields have fallen nearly a full percentage point in the past month, owing in part to foreign investment inflows and also reacting to a central bank plan to gradually reduce the amount of one-month bills (SBIs) it issues.
The finance ministry planned to raise 176.2 trillion rupiah of debt this year to repay maturing bonds and help plug a budget deficit.
Finance Minister Sri Mulyani Indrawati said last month she expected the budget deficit to reach 2.1 percent of gross domestic product this year, up from 1.6 percent forecast in the state budget, due to higher fuel and electricity subsidies.
(Reporting by Adriana Nina Kusuma and Saikat Chatterjee in Hong Kong; Writing by Gde Anugrah Arka; Editing by John Stonestreet)
((ga.arka@thomsonreuters.com; Reuters Messaging: ga.arka.reuters.com@reuters.net; +62 21 384 6364 ext 911)) Keywords: INDONESIA ECONOMY/BONDS (If you have a query or comment on this story, send an email to news.feedback.asia@thomsonreuters.com) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
© 2010 AFX News
