Indonesia to Sell up to US$500 million of debt backed by gas sales

Indonesia plans to sell $400 million to $500 million of debt backed by revenue from gas exports, as part of a bid to woo more foreign investors back to Indonesia .

The government will likely offer an initial batch of asset- backed securities in the first half of this year, backed by proceeds expected from a 22-year contract to supply natural gas from West Natuna and South Sumatera to Singapore.

If foreign investors buy the bonds, the government plans further sales, said Rizal Ramli, Indonesia's top economics minister.

``The aim of securitizing the export revenue is to bring back investors to Indonesia,'' Ramli said at a press conference.

Indonesia can raise funds more cheaply by assigning export revenue to securities than by issuing bonds, Ramli said, as ratings on securitized assets tend to be higher, reducing the interest rate the government must offer.

Indonesia's plans to privatize state firms and sell assets nationalized during the country's financial crisis of 1998-1999 got off to a slow start as religious conflicts and separatist violence made investors reluctant to put money into the country.

The government is inviting local and foreign investment banks to underwrite the securitization process, expected to be completed in the next four months.(*)