» Around Asia’s markets: Qualms arise over bonds in Indonesia

Around Asia’s markets: Qualms arise over bonds in Indonesia

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Around Asia’s markets: Qualms arise over bonds in Indonesia

Indonesia’s dollar-denominated government bonds are poised to fall and will probably trail their Asian counterparts in 2006, according to the brokerage firm Calyon.

A doubling in fuel prices in Indonesia last year and record interest rates will slow economic growth to 3.9 percent in 2006 from 5.4 percent in 2005, said Dilip Parameswaran, head of Asian credit research at the securities arm of Crédit Agricole. Gains in the securities in 2005 went too far given the outlook for the economy, he said.

Indonesia has $3.9 billion of dollar-denominated debt. It sold almost 90 percent of it in the past two years, the largest issuance in Asia after the Philippines. The government may issue another global bond in 2006, said Jusuf Anwar in October, when he was finance minister.

“The optimism is overdone, and there’s going to be a correction,” Parameswaran said. “Growth is going to slow.”

The nation’s dollar-denominated government bonds returned 8.2 percent in 2005, according to indexes compiled by HSBC. Only the Philippines gained more among the 10 Asian debt markets followed by HSBC last year, returning 20 percent.

More: iht.com

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