Indonesian retail bond to have 11.45 pct coupon -official

JAKARTA Aug 14 (Reuters) - Indonesia's next government bond issue for retail investors will have a coupon of 11.45 percent, up from 9.5 percent for the March issue, and is likely to attract strong demand, a finance ministry official said on Thursday.

Indonesia is using a variety of debt instruments pitched at different types of investor in order to diversify its sources of financing to cover the state budget deficit.

"The reason behind this issuance is to expand our domestic investor base," said Rahmat Waluyanto, treasury director general at the finance ministry, adding that "the rate has to be higher than the bank deposit rate and we need to take into account inflation expectations."

Annual inflation in July hit 11.9 percent, nearly a two-year high, and is likely to remain high until the end of the year, he added. The central bank has raised its key interest rate BIPG by a total of one percentage point since the beginning of May.

The finance ministry plans to sell its fifth issue of retail bonds on September 1. It raised 13.455 trillion rupiah ($1.47 billion) from the fourth issue in March, which had a coupon of 9.5 percent.

The offer period is from August 19-29, with settlement on September 3. The bonds will mature in 2013.

Separately, Indonesia's finance ministry also said it will launch a 5 trillion rupiah offering of Islamic bonds, known as sukuk, on Friday. [ID:nJAK150600].

Indonesia expects net debt issuance -- or total debt sales minus maturing debt -- to reach 117.8 trillion rupiah this year, as stated in its revised state budget. ($ 1 = 9,176 rupiah) (Reporting by Adriana Nina Kusuma, writing by Andreas Ismar, editing by Sara Webb)