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UPDATE 1-Indonesia domestic sukuk to have 5-yr maturity or more

(Adds details)

JAKARTA, Feb 18 (Reuters) - Indonesia’s regular domestic sukuk issues will have a maturity of five years or more, the finance ministry said in a statement on Wednesday.

The government expects to finance its higher budget deficit this year by capitalising on demand for Islamic-compliant products in the world’s most populous Muslim nation.

The finance ministry has proposed a budget revision to the parliament, including a revision of the budget deficit to 2.6 percent of gross domestic product from 1.0 percent, allowing more room for spending, needed to spur economic growth.

“The regular, sharia-compliant bond will be issued with a fixed or floating rate, ijarah sale-and-leaseback, with a medium to long-term maturity, more than 5 years,” the ministry said.

“The denomination may be in rupiah or foreign currency.”

For a table of the planned regular domestic sukuk issuance, please double click on [ID:nJAK277845].

Indonesia has a huge domestic market for sharia products. Islamic bonds do not pay interest, which is banned as usury under Islamic law, and are structured as profit-sharing or rental agreements underpinned by physical assets. (Reporting by Adriana Nina Kusuma and Sonya Angraini; Writing by Tyagita Silka; Editing by Sara Webb)

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