Jakarta – The Indonesian government Tuesday issued Rp 2 trillion ($1=IDR8,457) of bonds with a weighted average yield of 11.57%, the finance ministry said.

The weighted average yield was in line with market expectations and lower than the 11.82% weighted average yield for the bonds it issued last month.

The ministry said it received Rp 5.67 trillion in total bids for the bonds, which will mature Dec. 15, 2012, with a coupon of 11%.

Analysts said the strong demand for the bonds was likely because banks are looking for new assets in which to park their excess liquidity as Bank Indonesia plans to reduce the frequency of the auctions of its Sertifikat Bank Indonesia notes to once a month in June or July from once a week currently to spur lending.

The government plans to issue bonds every month to raise a total of Rp 28 trillion this year to help finance the state budget. The government earlier this month issued $1 billion in global bonds.

The highest yield granted by the government in Tuesday's auction was 11.60% and the lowest was 11.40%, compared with the highest yield of 12% and the lowest of 11.65% in last month auction.