New Indonesian Retail Bonds (ORI014) on Sale in Indonesia
Between 29 September and 19 October 2017, the Indonesian government offers its new series of (conventional) Indonesian Retail Bonds (in Indonesian: Obligasi Ritel Indonesia, or ORI) to Indonesian retail investors. Since 2006 the Indonesian government has been issuing ORI bonds, at least once per year, to finance the government's state budget.
Although the coupon rate of the latest ORI series - called ORI014 - is not as attractive compared to preceding series (as interest rates in Indonesia have been cut significantly by the central bank in recent years amid the stabilizing economy and relatively low inflation environment), the official sales points of the latest ORI bonds still detect strong demand from Indonesian retail investors.
For example, Jahja Setiaatmaja, President Director of Bank Central Asia (BCA), said his bank already sold IDR 1.75 trillion (approx. USD $130 million) worth of ORI014 bonds to investors, slightly over half of BCA's full target (IDR 3.1 trillion), while retail investors still have more than a week to buy these bonds (up to 19 October 2017).
Likewise, Bank Mandiri has also already sold over 50 percent of its ORI014 target (its target was set at IDR 1.5 trillion). Meanwhile, without mentioning an amount, Bank Rakyat Indonesia (BRI) said 180 investors have already purchased ORI014 through BRI and therefore the bank is confident that its target (IDR 500 billion) will be achieved.
ORI014 are three-year bonds (with the maturity date set at 15 October 2020) carrying a 5.85 percent coupon rate. It is important to point out that only Indonesian investors can purchase this type of bond (hence it is not open to foreign investors). The minimum investment value is IDR 5 million (approx. USD $370), while the maximum allowed investment is IDR 3 billion (approx. USD $222,000).
Ifan Mohamad Ihsan, Head of the Operational Division at the Indonesia Bond Pricing Agency (IBPA), said demand for ORI014 is strong despite the relatively low coupon rate because the 5.85 percent coupon is still higher than the average deposit rate in Indonesia. Moreover, the ORI bonds can be sold on the secondary market. Lastly, tax rates are more attractive for the ORI (compared to deposits). Ihsan expects total investment in the ORI014 series to reach between IDR 15 - 20 trillion.
Being backed by the Indonesian government (and law), the ORI bonds are one of the safest investment choices for the Indonesian retail investor.
Indonesian ORI Bond Series:
| ORI | Year |
Coupon (%) |
Maturity Date |
Investment (in trillion) |
| 001 | 2006 | 12,05 | 08-08-2009 | IDR 3.3 |
| 002 | 2007 | 9,28 | 28-03-2010 | IDR 6.2 |
| 003 | 2007 | 9,40 | 12-09-2011 | IDR 9.4 |
| 004 | 2008 | 9.50 | 12-03-2012 | IDR 13.5 |
| 005 | 2008 | 11,45 | 15-09-2013 | IDR 2.7 |
| 006 | 2009 | 9,35 | 15-08-2012 | IDR 8.5 |
| 007 | 2010 | 7,95 | 15-08-2013 | IDR 8.0 |
| 008 | 2011 | 7,30 | 15-10-2014 | IDR 11.0 |
| 009 | 2012 | 6,25 | 15-10-2015 | IDR 12.7 |
| 010 | 2013 | 8,50 | 15-10-2016 | IDR 20.2 |
| 011 | 2014 | 8,50 | 15-10-2017 | IDR 21.2 |
| 012 | 2015 | 9,00 | 21-09-2018 | IDR 27.4 |
| 013 | 2016 | 6,60 | 15-10-2019 | IDR 19.7 |
| 014 | 2017 | 5,85 | 15-10-2020 |