* Indonesia has asked other banks to submit proposal for USD
* Govt plans rule to ensure 'factual' research by bond
* Govt has met with bond dealers about the planned rule -
(Adds in 5th paragraph that JPMorgan declined to comment.)
By Hidayat Setiaji and Gayatri Suroyo
JAKARTA, Jan 9 Indonesia has barred U.S. bank
JPMorgan Chase & Co from submitting an underwriting
proposal for its next issuance of dollar-denominated Islamic
bonds, a finance ministry official said on Monday.
The government has asked other banks to submit proposals by
Thursday for a planned dollar sukuk offering, IFR, a Thomson
Reuters publication, reported on Monday.
The government's exclusion of JPMorgan comes shortly after
the Finance Ministry said it was penalising the U.S. bank
following its issuance of a negative report on Indonesia in
"The point is (JPMorgan) will no longer do business with the
government," said Suahasil Nazara, head of the Finance
Ministry's fiscal policy office, when asked if JPMorgan could
make a proposal for the U.S. dollar sukuk offering.
A JPMorgan spokeswoman declined to comment.
In the report issued after Donald Trump's election as U.S.
president, JPMorgan downgraded its Indonesian stocks
recommendation to "underweight" from "overweight".
On Jan. 4, Nazara defended the penalising of JPMorgan,
saying its research was "not credible and not objective".
RESEARCH RULE COMING
Indonesia is planning to issue a rule to ensure primary bond
dealers produce only "factual" research, senior government
officials said last week.
A primary bond dealer is a bank or a securities firm
appointed by the finance minister that can buy government bonds
in auctions and resell them in the secondary market. Indonesia
had 19 such dealers as of Nov. 25.
Officials have met with primary dealers to convey the
message that they should "help the government to maintain
stability," Nazara said on Monday.
In the JPMorgan case, the Finance Ministry dropped the U.S.
bank's services as a primary dealer for domestic sovereign bonds
and as an underwriter for bonds sold to the global market. The
bank also no longer receives certain transfers of state revenue.
Before the punishment, JPMorgan helped Indonesia to raise at
least $11 billion by selling global bonds between 2012 and 2016,
according to data from the Finance Ministry and the central
JPMorgan was part of a syndicate of banks working on
Indonesia's sale of 3 billion euros ($3.16 billion) worth of
bonds last June, but it was not listed for two more offerings in
U.S. dollar and yen since then.
In 2015, JPMorgan was one of the lead managers for a dollar
sukuk offering for Indonesia that raised $2 billion.
Foreigners hold more than 37 percent of Indonesia's
sovereign bonds, while the local capital market lacks depth and
liquidity, making the perception of foreign investors
particularly important for Southeast Asia's biggest economy.
($1 = 0.9493 euros)
(Reporting by Hidayat Setiaji and Gayatri Suroyo; Writing by
Eveline Danubrata; Editing by Richard Borsuk)