Move to attract more cross-border investment
in region
Following
the success of its yen-denominated "Samurai Bonds", the Indonesian
government says it will issue bonds denominated in the currencies of China and
South Korea next year.
Representatives
of Asean nations as well as China, Japan and South Korea are scheduled to
discuss the cross-border bond issuance under the Asean+3 bond market initiative
at the Asian Development Bank's (ADB) meeting this week.
"I
believe 2013 is reasonable timing for it [Asean+3 bond] to be issued … The
packages that we are going to offer will be similar to the Samurai Bonds in
Japan," Finance Minister Agus Martowardojo told reporters last week.
Samurai
Bonds have helped Indonesia reduce its cost of funds to plug budget deficits in
previous years as the yen-denominated bonds offered coupons that were
significantly lower than rupiah bonds.
The
first Samurai Bonds were issued in July 2009, raising about 35 billion yen
(Bt13.66 billion). The 10-year bonds offered coupons with a yield of 2.73 per
cent a year. The second issue was completed in November 2010, raising 60
billion yen, offering yields of 1.6 per cent and a 10-year maturity.
In April
2011, the government cancelled a planned third issuance on concerns of Japan's
needs for domestic financing after the March earthquake and tsunami disasters.
Hoping
to capitalise on Indonesia's cooperation with Japan, the Asean+3 Bond Market
Forum (ABMF), in collaboration with the ADB, recently published its first
bond-market guide to encourage more cross-border bond issuance and investment
in the Asean+3 region.
The
two-volume guide, accessible on the ADB and AsianBondsOnline websites, contains
information on bond market infrastructure, such as transaction flows, matching,
settlement cycles and numbering.
The
guide also describes the regulatory frameworks and market practices in
individual Asean+3 countries.
Asean+3
and the ADB are also slated to discuss increasing financing for the Chiang Mai
Initiative, a multilateral currency swap arrangement for Asean+3 members.
"We
want the financing to be increased, or at least doubled from the current
amount, which stands at US$120 billion [Bt3.77 trillion]," he said.
Agus
said that Asean+3 member representatives would also discuss establishing the
Asean Infrastructure Fund's (AIF) board of directors.
"The
board of directors will be representatives from Asean countries, while the ADB
will be responsible for managing the operations of the AIF," he said.
Agus
said establishing the board was essential as several member nations had a list
of projects awaiting funding from the AIF.
Economists
have said that encouraging a more active intra-regional bond and financing in
the Asean+3 region was essential to channel regional resources to regional
investments and would eventually lead to sustainable and balanced economic
growth in the region.
Hans
David Tampubolon
The
Jakarta Post
Business & Investment Opportunities
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