Indonesia mandates Citigroup, CSFB, Merrill for $1 billion bond sale

By Paul A. Harris

St. Louis, Sept. 2 - The Republic of Indonesia has mandated Citigroup, Credit Suisse First Boston and Merrill Lynch & Co. to manage a pending $1 billion bond offering, according to a market source.

No definite timing has been set, the source added. However the deal is expected to come before the end of the present year.

Sources have advised Prospect News recently that Indonesia could come with a new issue or else tap its 7¼% global bond due 2015.

On April 13 Indonesia priced $1 billion of the 7¼% bonds due April 20, 2015 at 99.127 to yield 7 3/8%. Citigroup, Deutsche Bank and UBS led the deal.

Recent weakness in the Indonesian currency, in addition to inflation scares and political tensions caused by the government's cancellation of fuel subsidies due to escalating fiscal costs stemming from record crude oil prices, have caused Indonesian debt to sell off earlier in the week, according to sources.

However the 7¼% issue due 2015, which had traded as low as 96 in the Aug. 22 week, was spotted late Friday at 98.125 bid, 99 offered and was said to be rallying with the rest of the market.

Moody's Investors Service assigns its B2 issuer rating to Indonesia. The issuer ratings from Standard & Poor's and Fitch are B+ and BB-, respectively.

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