Fixed Income
What is Government Bonds?
Government bonds are one of the safest investment products because of their low risk. Government Bonds are financing instruments issued by the Indonesian government and offered to individuals Indonesian citizens. There are 2 types of government bonds, there’s SUN and SBSN. SUN is Government bonds that denominated in Rupiah and foreign currency that which guaranteed by Indonesian government, as intended in Law Number 24 of 2002, and SBSN are Syariah Government Bond that publish based on Syariah principles, and denominated in Rupiah or foreign currency
Features and Benefits of Government Bond Investment
- Investment guaranteed by the Indonesian Government with 100% return of capital value at maturity
- Bonds with coupon/yield payments with fixed and floating interest
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Government Bond Investment Requirements by KBVS
- Minimum age 18 years old
- Have an e-KTP
- Have a NPWP
- Have a customer fund account (RDN)
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Types & Product Types of Government Bonds
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Types of Government Bonds
Initial Market Bonds
Initial bonds are issued to the public at a price according to the offering value (initial public offering). SBN can only be bought on offering period. Not all SBN are tradeable, ORI and SR are the only SBN that can be tradeable on secondary market after the holding period over, ORI and SR have maturity of 3 and 6 years. Indonesian Government also release SBR and ST Series that are non tradeable, this series have an Early Redemption facility at the specified time. SBR and ST have maturity of 2 and 4 years
Secondary Market Bonds
Secondary bonds can be traded with other investors at any time before maturity. In terms of maturity. The principal value follows market movements thereby increasing the potential for capital gains. Bonds sold in the secondary market can be purchased at any time before maturity, are traded at any time, and the prevailing price depends on the market price at the time of the transaction.
Features & Benefits of Primary Market Government Bonds
- Rate of Return is higher than deposits.
- Fixed monthly income from coupon payments.
- Payment of Coupons/Yields on the same day every month. SBR and ST products have floating with floor interest rates with minimum coupon calculations, while ORI and SR products have fixed interest rates that are valid until maturity.
- Tenor of up to 2 – 6 years with repayment capacity before maturity. SBR and ST products have a term of 2 years with a 50% early redemption capability after the first year, while SR and ORI products have a term of 3 years and can be trade on secondary market after passing the minimum holding period.
- Purchases start from IDR 1 million. Purchases can be made in multiples of IDR 1 million, up to a maximum of IDR 5billion and IDR 10 billion.
- Tax returns are at a lower level than deposits. 10% of coupon per year.
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Features & Benefits of Secondary Market Government Bonds
- Product selection of more than 70 series.
- Can be traded at any time starting from IDR 1 million for Rupiah Bonds.
- Available in various currencies and time periods Available in Rupiah and US Dollars. Terms ranging from 5 to 30 years Can be traded at any time at market prices.
- Can be resold after completion of the transaction and with the potential for capital gains.
- • Purchases start from IDR 1 million or USD 1,000 and with fixed coupons. Invest starting from IDR 1 million or USD 1,000, you can start investing and receive fixed coupons that are paid every 6 months.
- Tax returns are at a lower level than deposits. 10% of coupon per year.
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