Government Auctions Rp 15 Trillion in State Bonds

The Indonesian government will hold another auction of State Treasury Bonds (SUN) on Tuesday, January 17, 2017. In this auction, the government will offer five series of SUN in local currency to partially fulfill its financing target in the 2017 State Budget (APBN). The coupon rates in this auction range from a low of 7 percent to a high of 8.25 percent, while the Short-Term Notes (SPN) will use a discount coupon rate.

The five series are SPN03170418 maturing on April 18, 2017; SPN12180104 maturing on January 4, 2018; FR0059 maturing on May 15, 2027; FR0074 maturing on August 15, 2017; and FR0072 maturing on May 15, 2036. The indicative target for this auction is Rp 15 trillion, with a maximum target of Rp 22.5 trillion. The nominal value of each SUN unit is Rp 1 million.

Fifteen banks and four securities firms serve as primary dealers for the SUN to be issued by the government on January 17, 2017. Since November 25, 2016, the Directorate General of Financing and Risk Management of the Ministry of Finance has removed JPMorgan Chase Bank NA as a primary dealer for SUN and the auction of State Sharia Securities (SBSN). The government expressed anger over the downgrade of Indonesia's bond market investment recommendation by two levels from overweight to underweight following Donald Trump's election as President of the United States. The Ministry of Finance ultimately terminated its cooperation with JPMorgan as a collecting bank.