» Around Asias markets: Indonesia turns to bond sales

Around Asias markets: Indonesia turns to bond sales

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Around Asias markets: Indonesia turns to bond sales

Munandar Arif is selling half his stock holdings and all his investments in bank deposits to buy bonds in Indonesias first debt sale targeted at individuals.

Interest rates are falling and Id get less and less when I put my money in bank deposits, said Arif, a project manager for a company that designs Internet banking services in Jakarta. Stocks are a gamble, while these bonds give me peace of mind Ill get a guaranteed high return for at least three years.

The government is turning to its wealthier citizens to help fund a budget deficit that will almost triple this year, a role previously undertaken by institutions like banks, pension funds and foreign investors. Indonesia needs the funds to cover a deficit that is swelling as fuel and power subsidies rise due to higher oil costs and as the nation spends trillions of rupiah to rebuild after natural disasters in Java.

The nation will sell 2 trillion rupiah, or $220 million, of bonds to retail investors through Aug. 4 in its first sale of the securities to individuals. Investors have to buy a minimum of 5 million rupiah of the bonds, which mature in three years.

More : iht.com

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