UPDATE 1-Indonesia picks banks for sovereign sukuk
* Indonesia picks 3 banks for sovereign sukuk
* Deutsche Bank, HSBC, Standard Chartered to run deal
* Sukuk due before year-end - sources (Adds comment, background)
By Bernardo Vizcaino and Mirna Sleiman
DUBAI/JAKARTA, Sept 6 (Reuters) - The Republic of Indonesia has mandated Deutsche Bank, HSBC and Standard Chartered for a new global Islamic bond, or sukuk, issue, the acting head of the country's debt office confirmed on Thursday.
The official, Robert Pakpahan, was responding after two banking sources told Reuters the three banks had been chosen and that the sale would go ahead before the end of the year.
In August, Pakpahan said the state planned to issue a $1 billion sukuk in late October, as well as $750 million worth of yen-denominated bonds.
Indonesia, the world's most populous Muslim country, last tapped global debt markets in April with a $2.5 billion two-tranche bond..
The $2 billion ten-year bond, which priced at 3.75 percent, was yielding about 3.2 percent on Thursday, according to Thomson Reuters data. Meanwhile, the $500 million 30-year bond, which priced at 5.25 percent, was yielding around 6.7 percent.
Low interest rates are enabling governments across Southeast Asia to raise spending on infrastructure - one of the region's big weak spots.
Indonesian President Susilo Bambang Yudhoyono announced during a speech last month that he would boost capital spending by 15 percent to 193.8 trillion rupiah ($20.25 billion) in 2013 to improve the road network in the archipelago nation and to finance 15 new airports.
Indonesia's 5-year credit default swaps, or the cost to insure its debt against default, stood at just over 170 basis points (bps) on Wednesday, down from over 255 bps in early June. Credit default swap prices can be an indicator of investor confidence.
Indonesia's central bank governor, Darmin Nasution, said on Wednesday that the country will grow 6.4 percent in 2012 and 6.6 percent next year, with the bank adopting policies that promote growth while containing inflation.
In June, the central bank said economic growth could fall at the low end of the 6.3 to 6.7 percent GDP forecast for 2012. ($1 = 9570.0000 Indonesian rupiahs) (Additional reporting by Janeman Latul and Adriana Nina Kusuma in Jakarta; Editing by David French)
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