Indonesia's debut sale of euro bonds attracted bids for almost seven times the €1 billion (HK$10.4 billion) sold, as the country took advantage of lower borrowing costs in Europe. It issued the seven-year notes at 2.976 per cent, or 195 basis points above the euro mid-swap rate, the finance ministry said yesterday. That compares with the 4.032 per cent secondary-market yield on Indonesia's similar-maturity sovereign US dollar securities. The sale attracted €6.7 billion of bids, the ministry said. Indonesia, which holds a presidential election on Wednesday, needs to sell a record amount of debt this year to fund a fiscal deficit target of 2.4 per cent of gross domestic product, which was increased from 1.69 per cent last month. The European Central Bank cut its benchmark interest rate to a record-low 0.15 per cent on June 5 and introduced negative deposit rates. The euro sale was aimed at reducing reliance on US dollar bonds as America cuts stimulus, Indonesian authorities said in January. "Indonesia successfully opened a new market for itself," Yudistira Slamet, head of fixed-income research at PT Danareksa Sekuritas, one of the selling agents, said in Jakarta yesterday. "Indonesia locked in a relatively low yield, compared with its existing bonds, while European investors won an attractive rate." Portugal's euro bonds due April 2021, rated two levels lower than Indonesia by Moody's Investors Service, yielded 3.023 per cent on Wednesday. The premium investors demand to hold 10-year US Treasuries over similar-maturity euro mid-swaps has surged to a record high of 1.14 percentage points, compared with 0.87 of a percentage point at the end of last year. "It's smart of Indonesia to tap the euro market now as the ECB's easing bodes well for demand," Ezra Nazula, head of fixed income at Manulife Aset Manajemen Indonesia in Jakarta, said on Wednesday. "The trend for dollar yields is up, while euro yields should remain low. This is the government's way of responding to this." The ministry said 24 per cent of the euro bonds were sold to investors in Britain, 19 per cent to those in Germany and Austria, 4 per cent to Switzerland, 18 per cent to the US, 24 per cent to Asia and the rest to other European funds. Some 65 per cent of the debt was sold to asset managers, 15 per cent to lenders, 12 per cent to central banks and 8 per cent to insurance and pension funds. Indonesia sold 249 trillion rupiah (HK$161.7 billion) of debt in the first half of this year, or 58 per cent of a record gross issuance target of 423.7 trillion rupiah.