Govt-issued Euro Bond Down in Demand

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  • AP/Yves Logghe

    AP/Yves Logghe

    TEMPO.CO, Jakarta - Indonesia's euro-denominated state bond (SUN) offered last week is losing interest compared to last year's offering. In 2014, the government-issued euro bond was oversubscribed by 6.7 times. This time, it only recorded a 1.6-times oversubscription.

    On Thursday last week, Indonesia auctioned the 10-year SUN Euro RIEURO725 series with a nominal value of €1.25 billion. The offering was oversubscribed by €2.4 billion.

    Finance Minister Bambang Brodjonegoro said the decline in demand from investors is understandable considering Greece's crisis that overshadows Europe's economy.

    Tony Prasetyantono, an economist from Gadjah Mada University, said the declining demand for foreign currency bonds signaled two conditions. First, Indonesia's economic outlook weakens; causing the market to lose enthusiasm over Indonesian securities.

    The second reason is Europe's weakened economy due to the Greek crisis, causing euro-based securities markets to falter.

    However, the fact that the bond auction still recorded an oversubscription shows that the market is still confident over Indonesia's economic outlook.

    The RIEURO725 bond has a 3.375 percent coupon with a return rate of 3.555 percent. The bond will mature on July 30, 2025.

    ALI HIDAYAT