TEMPO.CO, Jakarta - The proceeds of the Indonesian Retail Bond (ORI) sales are still below the target, especially the ORI014 series. Hence, the government will launch seven more actions of the series before year-end.
Director General of Risk and Financing Management of the Ministry of Finance, Robert Pakpahan, said that he was not worried if the sales proceeds of Rp8.94 trillion of the Indonesian Retail Bond, ORI014 Series, are still below the previously set indicative target of Rp13 trillion.
"In terms of financing, we are not worried because we still have many options," Pakpahan stated when asked in Jakarta on Tuesday (Oct 24).
Pakpahan added that one of the reasons why ORI014 was less attractive to retail investors was because of the low coupon rate of 5.85 percent, following the current interest rate growth. The coupon rate of 5.85 percent is also lower than the coupon rate on the ORI issuance of the previous series.
"Currently, in Indonesia, the interest rate is down, so the 5.85 percent coupon rate is considered low. This reflects secondary market in the state securities market," Pakpahan remarked.
Although not having met the target in ORI issuance, Pakpahan believed that the issuance in the routine auctions of state securities, such as State Debentures and State Sharia Securities (SBSN), can help achieve financing targets.
"In our auctions, in the last two for instance, the target was found to be exceeding. In last weeks auction, we had a target of Rp17 trillion, but we concluded with proceeds of Rp22 trillion," Pakpahan explained.
He was optimistic that the target in the issuance of state securities (SBN) and the budget deficit set at the end of 2017 can still be achieved under these conditions and covered by regular scheduled auctions.
"The realization in the issuance of state securities has reached 91 percent of the gross target. Therefore, what has not yet been realized is small, namely nine percent of the total needs. The remaining nine percent is expected to be covered from the proceeds of seven more auctions, which will be held until December," he elaborated.
Previously, the government announced the results of the sales and allotment of Retail State Bonds series ORI014 of Rp8.94 trillion, with total orders accounting for Rp8.97 trillion.
The sales of ORI014, which matures on Oct 15, 2020, has reached 22,882 subscribers in all provinces in Indonesia, with a total of 11,182 new investors for this retail bond.
The largest number of ORI014 subscribers are those who are in the range of Rp5 million to Rp100 million, or around 44.73 percent. However, the average volume of orders reached Rp391.08 million.
With ORI014 sales of Rp8.94 trillion, the net realization of SBN is estimated at Rp407.41 trillion, or 94.1 percent of the Net SBN target of Rp432.96 trillion.
In the meantime, Finance Minister Sri Mulyani Indrawati said that the investor base of Indonesia Retail Bonds (ORI), launched by the government, has started to spread to the entire community and not only to certain groups.
Sri Mulyani made the statement on Monday (Oct 23) in Jakarta in response to the fact that the largest numbers of buyers from ORI014 sales are those who bought bonds with a value from Rp5 million to Rp100 million.
"I think that is a good indication of the widespread, or the so-called retail, outreach to the individuals in the community. This is good because we want retail bonds to expand on an individual basis," she stated.
The government has set the proceeds of ORI014 sales or allotment of Rp8.94 trillion, with total incoming orders valued at Rp8.97 trillion.
ORI order quality is better than the previous issuance, because there is an increase in the number of subscribers who are buyers, with a range value of Rp5 million to Rp100 million, or 44.73 percent of total subscribers.
Previously, the largest order on ORI issuance in the last eight years was in the range of Rp100 million to Rp500 million.
However, the sales of ORI014, which only reached Rp8.94 trillion, made the average order of retail bonds only at Rp391 million, or the lowest compared to the average ones in the last seven years, amounting to Rp560 million.
Sri Mulyani believes that the issuance of Government Securities (SBN) can subsequently cover the Net SBN target and the budget deficit by the end of 2017, although the sales of ORI014 is lower than the previous ORI allotment.
"We are still optimistic in accordance with the target. Therefore, we hope the next seven auctions will still cover the deficit target this year," she remarked.