The Indonesian government sold €3 billion worth of euro-denominated bonds (Surat Utang Negara, or SUN) on Tuesday (07/06) consisting of €1.5 billion of 7-year tenure bonds with a yield of 2.772 percent and €1.5 billion of 12-year tenure bonds with a yield of 3.906 percent. Combined, the issuance was oversubscribed 1.79 times with a total book order for the dual-trance bonds at €8.36 billion. Robert Pakpahan, Director General of Financing and Risk Management at Indonesia's Finance Ministry, said funds will be used to finance the 2016 budget deficit, which is expected to widen to 2.48 percent of GDP.

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Over the last few months, we have seen a good deal of stability in the financial markets. This has been the experience in most asset classes, and the global value of the Indonesian rupiah is giving investors an idea of how the IDR is likely to continue to perform as an emerging market asset.

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One of Indonesia's long standing companies - and also one of the most controversial ones in Indonesia - Bakrie & Brothers plans to offer part of its shares to creditors Mitsubishi Corporation, Glencore International, and Eurofa Capital Investment in a debt for equity swap. This plan is part of the company's efforts to restructure USD $453 million worth of debt through mandatory convertible bonds. Indra Ginting, Chief Investor Relation Officer at Bakrie & Brothers, confirmed the company owes Mitsubishi USD $150 million, Glencore USD $200 million, and Eurofa Capital USD $103 million.

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In the past two weeks, two of the big international credit rating agencies released new reports about Indonesia's fiscal situation. Both agencies affirmed Indonesia's sovereign debt rating: Fitch Ratings kept Indonesia at BBB-/stable (investment grade class) and Standard & Poor's (S&P) maintained Indonesia at BB+/positive (highest junk level, one notch below investment grade). S&P's decision to keep Indonesia within the junk level category was met with disappointment among investors and Indonesian government officials but perhaps not that surprisingly.

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