JAKARTA, Apr 17, 2009 (AFP) - Indonesia has sold 650 million dollars of its first dollar-denominated sukuk, or Islamic bonds, on the international market to help cover a widening budget deficit, a senior official said Friday.
"The issuance was performed to meet our funding target for the 2009 budget, to diversify our funding instruments and widen the investor base for sukuk on the international market," finance ministry official Rahmat Waluyanto said.
Waluyanto said the five-year Islamic bond, which matures April 23, 2014 and pays a fixed 8.8 percent rate of return, was about seven times oversubscribed when it went on the market Thursday.
Middle Eastern and Islamic investors snapped up 30 percent of the issuance while buyers from Asia, including Indonesia, accounted for 40 percent.
US investors bought 19 percent and European investors 11 percent.
Funds were the largest investor class, accounting for 45 percent of demand, while banks bought 37 percent. Retail investors bought 14 percent and insurance and pension funds four percent.
Although Muslims form the majority in the country of 234 million people, shariah finance comprises only one to two percent of all finance.
Sukuk conform to Islamic Shariah law in which charging interest is forbidden. They create returns through profit-sharing agreements or from the lease of securitized assets owned by the seller.
Indonesia's sukuk use the assets model, known as ijarah, and are backed by government land and buildings.
Indonesia's shariah financing market still lags far behind nations like Malaysia in magnitude.
-- Dow Jones Newswires contributed to this story --
Link:
0 Comments:
Post a Comment