Indonesia Bond Pricing Agency (IBPA) will issue a benchmark for medium term notes (MTN) in the fourth quarter of 2016. The MTN benchmark is necessary for transactions in the secondary market.
Wahyu Trenggono, Director of IBPA, said MTN investors struggle to get the right price when they want to sell MTN before its due date. This forces them to sell MTN with lower prices despite their need for funds.
Wahyu also stated that MTN offered to investors were limited. Therefore, MTN buy and sell transactions in the secondary market are according to negotiated prices. IBPA wants the exact price to be clear so that investors will not feel disadvantaged.
IBPA is requesting for permission from the Financial Services Authority (FSA) and Bank Indonesia (BI) to release references for MTN benchmark. Once issued, it is expected there will be a ranking that can be used as reference. MTN index price is also predicted to deepen the domestic financial markets.
“This will help the MTN issuers to determine the initial price. Besides, the primary market will also be more liquid because the price is clear. Aside from buy and sell, MTN might also be able to get repo thus deepening the financial market.” (*)
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