Govt Mulls Offering Bonds to China

TEMPO.CO, Jakarta - The government is exploring the possibility to offer bonds denominated in foreign currency to the Chinese government. Finance Minister Bambang Brodjonegoro said that the offer is based on the fact that China has the largest forex reserves in the world.

Bambang did not say the total value of bonds to be offered to the People's Bank of China (PBC).

The move is in accordance with the government's target to increase the portion of foreign currency bond issuance given the current downturn in the domestic market.  Bambang said the sluggish market has also limited the financial capacity of domestic investors.

"Even so, foreign holding of government bonds (SUN) is limited to a maximum 38 percent as a way to minimize risk management," he said in Jakarta last weekend.

The government also plans to issue bonds denominated in Japanese yen—also known as samurai bonds—in the second semester. Bambang also did not provide details about the proceeds target from the samurai bond issuance. He only said that the government is targeting for proceeds higher than the issuance three years ago, which was US$600 million.

SINGGIH SOARES