JAKARTA, July 13 (Reuters) - Indonesia aims to raise up to $650 million in a global sukuk issu
e in October and has appointed HSBC, Citigroup and Standard Chartered as underwriters, said a finance ministry official on Tuesday.
Indonesia said last month the sukuk, its second international Islamic offering in as many years, could be about $500-$600 million, as the world's most populous Muslim country seeks to capitalise on growing demand for sharia paper.
'Based on our document sent to the banks, we aim to get a maximum $650 million but it could be lower depending on the market reaction,' Dahlan Siamat, the finance ministry's director in charge of Islamic financing, told Reuters.
'It will not be bigger than our previous sale last year,' Siamat said.
The government sold $650 million in sovereign sukuk in 2009.
Indonesia has often failed to raise its target amount in regular local currency sukuk auctions in recent months amid investors' concerns over poor liquidity in the paper, in sharp contrast to strong demand for its conventional debt. .
The global issue would be used to help finance the budget deficit and as a benchmark.
The sukuk would be based on the ijara structure and the underlying assets would be government buildings, Siamat said.
'We hope to get a tenor around 7 to 10 years,' Siamat said.
Ijara, or leasing, is a form of financing of specific assets such as plant and machinery, vehicles or office equipment, the ownership of which remains with the leaser.
In May, Malaysia sold $1.25 billion worth of 5-year sukuk at par with a yield spread of 180 basis points over U.S. Treasuries, after attracting orders worth around $5.5 billion.
Some Islamic funds can only invest in sharia-compliant assets and there have been few large offerings as the sukuk market struggles to recover from Dubai's debt restructuring and several high profile defaults.
(Reporting by Janeman Latul in Jakarta and Saikat Chatterjee in
Hong Kong; Editing by Neil Chatterjee) ((If you have a query or comment on this story, send an email to email@example.com) Keywords: INDONESIA SUKUK/
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