Indonesia Issues Longest-ever 40-Year Bonds

TEMPO.CO, Jakarta - The Indonesian Finance Ministry has issued a new series of Government Bonds (SUN) with a total value of Rp3 trillion. The bonds, designated FR0105, have a maturity date of July 15, 2064, making them the longest-tenor government bonds ever offered on the domestic market.

The initial transaction for this series was conducted through a private placement mechanism. "The goal is to introduce SUN with a 40-year tenor, providing investors with a long-term investment option,” said Deni Ridwan, Director of SUN at the Directorate General of Risk Management and Financing (DJPPR) of the Finance Ministry in an official statement quoted on Friday, August 30, 2024.

The issuance of FR0105 aligns with the Finance Ministerial Regulation number 51/PMK.08/2019 concerning the Sale of SUN by Private Placement. Deni expressed hope that future transactions for this series will be conducted through a regular auction mechanism.

This step is part of the government's efforts to deepen the domestic Government Securities (SBN) market, particularly to support the growth of the pension fund and insurance industries, which require long-term investment instruments with a measurable level of risk.

Abdul Hadi, Chairman of the Indonesian Pension Fund Association, welcomed the issuance, emphasizing the association's ongoing discussions with the government regarding the need for longer-tenor investment instruments. 

“This instrument is highly suitable for our long-term risk profile and will enable us to better manage our investment portfolio,” he stated.

Iwan Pasila, Deputy Commissioner for Supervision of Insurance, Guarantees, and Pension Funds of the Financial Services Authority (OJK), also expressed support for the long-tenor SBN. He assessed that it would provide financial services institutions with more investment options. 

“This will not only enhance the resilience of the financial industry but also contribute to the deepening of the domestic SBN market and national economic growth,” Iwan said.

ILONA ESTHERINA

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