Sharia Banking and the Financial Industry » Debt Issue Cut http://www.shariabanking.info Islamic Banking The Fastest Growing Segments of The Financial Industry Sat, 14 Jan 2012 10:31:21 +0000 en hourly 1 http://wordpress.org/?v=3.2.1 Government Cuts Planned Debt Issue By 26% http://www.shariabanking.info/government-cuts-planned-debt-issue-by-26.php http://www.shariabanking.info/government-cuts-planned-debt-issue-by-26.php#comments Wed, 28 Jul 2010 02:06:31 +0000 admin http://www.shariabanking.info/?p=336 debt cutsIndonesia will cut its remaining 2010 debt issue by 26 percent, including scaling back a global sukuk, or Islamic bond, offering after lowering its deficit forecast in light of expected faster growth and stronger revenue. The move to trim Rp 15 trillion ($1.7 billion) off the Rp 58 trillion worth of debt still to be issued spurred longer-dated bond prices as investors bet the deficit cut could lead to a much-sought-after investment-grade credit rating.
Foreigners have bought a record amount of Indonesian bonds this year, drawn by the country’s robust economic growth, hopes of a credit upgrade and expectations that the rupiah will continue to appreciate. The government had a budget surplus in the first half, so it would be reluctant to push a huge global issue this year. The government has raised about Rp 120 trillion in bonds this year, or two-thirds of its original target of Rp 178 trillion.
Its higher-yielding local currency sukuk has seen less demand than conventional bonds, with the Finance Ministry again raising less-than-targeted in an auction on Tuesday because of fears the sukuk market lacks liquidity. The global sukuk will be downsized because up to now the government has still booked a budget surplus. Indonesia has cut its financing by about Rp 37 trillion ($4.1 billion) this year — a cut of 28 percent, including the debt issuance cut — because the government now expects a budget deficit of just 1.5 percent of GDP, versus an earlier projection of 2.1 percent. The cut is equivalent to 3.3 percent of its planned expenditure.

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