INDONESIA - CAPITAL MARKETS - Indonesia Debt Drops Most in 8 Months on Fuel: Islamic Finance

www.thejakartaglobe.com - Indonesian two-year sukuk, or the Islamic equivalent of bonds fell last month, pushing up yields by the most since September, as Standard & Poor's, kept the nation’s credit rating at junk after the government maintained fuel subsidies.

Yields on sovereign 8.8 percent Shariah-compliant dollar-denominated bonds due April 2014 climbed 39 basis points to 2.92 percent on April 30, according to data compiled by Bloomberg.

That compares with a 17 basis point drop in yields on Malaysia’s 3.928 percent global sukuk due 2015. The government’s inability to pare spending on energy subsidies will boost the budget deficit to 3.5 percent of gross domestic product, from 1.3 percent last year, President Susilo Bambang Yudhoyono said last week.   (source)

INDONESIA - CAPITAL MARKETS - Danamon Takeover Lifts Indonesia's JCI to All-Time High

www.thejakartaglobe.com - Indonesia’s benchmark stock index closed at an all-time high on Tuesday, boosted by Bank Danamon Indonesia’s shares, which resumed trading following a record buyout offer from Singapore’s DBS Group.

The Jakarta Composite Index gained 49.37 points, or 1.2 percent, to 4,215.44. That eclipsed the last record closing high, set on Aug. 1 at 4,193.44.

The stock measure’s biggest gainer was Danamon, up 39 percent at Rp 6,400, its highest close since March 23, 2011. DBS is set to acquire all of Danamon in one of Indonesia’s biggest takeover deals. Danamon was suspended from trading on Monday.  (source)

BANKING - Central Bank Forecasts Islamic Bank Assets to Jump by Up to 55% This Year

The assets of the nation’s Islamic banks are expected to grow by half this year as people in the world’s largest Muslim-majority state increasingly turn to the sector for their financial needs, according to a report by the central bank released over the weekend.

“If Indonesia’s economy grows at a decent pace, the assets of Islamic banks will increase by 55 percent,’’ said Mulya Siregar, director of Shariah finance at Bank Indonesia. (source)