[JAKARTA] Four Indonesian state firms are preparing to issue what could be the first rupiah-denominated global bonds, termed "komodo bonds", to raise funds for infrastructure projects in the country, senior officials said.

President Joko Widodo, who had approved the plan, chose the term "komodo bonds" over suggestions that they be named after local food, said Aloysius Kiik Ro, deputy of restructuring and business development at Indonesia's state enterprises ministry.

The Komodo dragon is a very large species of lizards found in eastern Indonesia.

Mr Ro did not identify the companies that will issue the bonds, but said they are related to infrastructure such as toll roads.

Many Indonesian companies, particularly in the commodities sector, had issued bonds denominated in US dollars over the past few years, but struggled to service their debt after the local currency weakened against the greenback.

The rupiah has stabilised and inflation is under control now, thus reducing the risk of "komodo bonds" for potential investors, said Royke Tumilaar, a director at state-controlled lender PT Bank Mandiri Tbk. "By seeing that the risk is low, investors will be optimistic about getting better yields compared to US dollar bonds," he said.

Indonesia's benchmark 10-year treasury bond is currently yielding around 6.5 per cent.

State firms are courting foreign pension funds by offering a share in future revenue from toll roads, power stations and other infrastructure projects, as part of a presidential drive to secure US$10 billion in additional inflows.

REUTERS