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Indonesia to sell more retail bonds to expand local investor base

[JAKARTA] Indonesia will sell more sovereign bonds to local individual investors this year, an official at the finance ministry said, as it tries to lower its dependence on foreign funds and deepen the local financial market.

Southeast Asia's largest economy will sell four types of retail bonds in 2016, Loto Srinaita Ginting, a director at the finance ministry's financing office, told an investor conference call late on Thursday.

Indonesia will issue conventional and sharia retail bonds it regularly issues and add two more instruments - convestional savings bonds and sharia savings bonds - that investors hold until maturity.

The government plans to raise 10 percent of its rupiah bond issuance target through these retail notes, or around 54 trillion rupiah (S$5.6 billion), Ginting said. It is 10 per cent higher than the 49.4 trillion rupiah of retail bonds sold to Indonesians last year. "Since we have increased the issuance compared to last year, every quarter we will issue retail bonds," she said.

Local media quoted Robert Pakpahan, the finance ministry's director general for financing and risk management, as saying the move was intended to bring down foreign ownership in overall tradable bonds to 30 per cent from 39.4 per cent by Feb 17.

On Thursday, the government began marketing 3-year retail sukuk, aiming to raise 25-30 trillion rupiah.