Indonesia to issue Islamic bond in middle of June

Indonesian Finance Ministry plans to sell 1 trillion rupiah (over 108 million U.S. dollars) Islamic bonds or "sukuk" on June 15, the ministry said in a statement issued Tuesday.

The proceeds will be used to plug the state-budget deficit.

The bonds will be sold in five series with maturity in 2015, 2017, 2020 and 2030 and with coupons of 8.80, 9.00, 9.25 and 10.25 percent.

The government plans to issue over 10 trillion rupiah (about 1. 082 billion U.S. dollars) Islamic bonds out of 178 trillion rupiah (some 19.26 billion U.S. dollars) of total bonds planned to be issued this year, Director General of Debt Management of the ministry Rahmat Waluyanto said.

So far the government has issued more than a half of the Sukuk target for this year, he said.

The government has planned to target budget deficit of 2.1 percent of the GDP.

Indonesia, the world biggest Muslim country, has a huge potential for Islamic financial market.

Islamic bonds are structured as a profit sharing or rental agreements underpinned by physical assets, and do not pay interest.

source : Xinhua.