Indonesia appoints brokers to sell Sukuk issue

Reuters -- Indonesia's finance ministry said on Monday it has appointed three of the biggest local securities firms to sell the country's first rupiah-denominated Islamic bonds.

PT Mandiri Sekuritas, PT Trimegah Securities Tbk, and PT Danareksa Sekuritas were appointed selling agents, the ministry said in a statement on its Web site, www.dmo.or.id, while law firm Marsinih Martoatmojo Iskandar Kusdiharjo was appointed legal consultant.

The rupiah-denominated Islamic bond, or Sukuk, may be issued in two tranches, a senior official at the finance ministry said. 'There is a possibility that it will be issued in dual tranches, in seven-year and 10-year maturities,' Dahlan Siamat, a director in charge of Islamic financing at the finance ministry, told reporters late on Friday.

'The consequence for that will be on the price, for the 10-year (tranche) investors might demand a higher coupon.'

Indonesia, which has the world's largest Muslim population, also plans to sell dollar-denominated Sukuk in November. The proceeds from both rupiah and dollar Sukuk issues will be used to help plug the budget deficit.

The finance ministry aims to use 18.371 trillion rupiah, or about $2 billion worth of property, as the underlying assets for the Islamic bonds, setting the maximum amount of such bonds that the government can issue.

Sukuk bonds comply with Sharia, or Islamic law, which bans charging interest. Investors are instead paid income derived from assets such as rent from property or commercial transactions such as trade in goods and services.

Indonesia, Southeast Asia's largest economy, still lags neighbours such as Malaysia in developing Islamic products. With Muslims accounting for 85 percent of the population of 226 million people, Indonesia is considered a huge potential market for the Islamic finance industry.

Following are the new details of the timetable of rupiah Sukuk issuance.

Following are the details:

Book building : Aug 15-22

Pricing and allotment : Aug 22

Offer period : Aug 15-22

Settlement : Aug 26

Listing on the bourse : Aug 27