Tuesday, 7 October 2014

Indonesian government auctioning sukuk on October 7

The government of Indonesia will hold a government shari'ah securities (SBSN) auction on the morning of October 7, 2014 with results announced that afternoon. The SBSN series to be auctioned are Project Based Sukuk series PBS005 (reopening), PBS006 (reopening), and the short-term Sukuk series SPN-S 08042015 (new issuance). The SPN-S sukuk are being auctioned in part-fulfilment of financing targets stated in the 2014 State Budget.

The auction of these government bonds will be conducted through the auction system provided by Bank Indonesia as the agent of the SBSN auction. The auction will be an open auction, allowing both individual investors and institutions in principle to offer bids. However, the bids shall be conducted only with registered auction participants which have obtained the authority from the Ministry of Finance.

Settlements are due on October 9 and will be conducted through BI-SSSS (Bank Indonesia-Scripless Securities Settlement System) and shall only be held with the auction participants. Those who offer a competitive bid shall pay according to the yield proposed. Those who offer a non-competitive bid shall pay according to the weighted average yield of non-competitive bidding won. The government has the right to sell those SBSNs at higher or lower than the indicative amount.

SBSN series SPN-S 08042015 will be issued using the ijarah sale and lease back method while PBS005 and PBS006 use the ijarah asset to be leased akad (covenant) method. 

More information is available here.