Planned issuance of assets-backed bonds canceled

The government's plan to issue assets-backed debt securities has been canceled following the rejection from the World Bank that does not allow Indonesia to pledge its assets as collateral to a third party outside multilateral lending institutions.

"In our debts agreement with the World Bank, there is a negative pledge clause, meaning that we cannot securitize our assets and therefore, for now, that plan is put on hold," Coordinating Minister for the Economy Burhanuddin Abdullah said on Monday.

When Rizal Ramli was still a coordinating minister for the economy, the government had planned to issue debt securities, backed by future proceeds from the sales of natural gas from Natuna to Singapore.

The government has even selected a number of global investment banks to support the issuance of the asset-backed debt securities. But the plan met a strong opposition from the World Bank that forced the government to cancel the plan. (*)