The Republic of Indonesia late last night priced a $2.5 billion 10-year bond at a yield of 5.1%, at the final guidance.
The coupon was fixed at 4.875%, the lowest coupon ever achieved by Indonesia for a 10-year dollar bond. The notes were reoffered at 98.254.
The leads had told investors that Indonesia would raise between $2 billion to $2.5 billion and it ended up achieving the high end of the targeted issue size. The deal is one of the largest single-tranche US dollar offerings by an Asian borrower.
Deutsche Bank, J.P. Morgan and UBS were joint bookrunners.
The deal gathered an order book of $6.9 billion from more than 270 accounts. There was particularly strong participation from high-quality US accounts, which bought 49% of the deal. Asian investors bought 29% and European investors 22%. By investor type, fund managers bought 70%, banks/central banks 24%, insurers 3% and private banks 3%.
According to one person familiar with the deal, Indonesia decided not to issue a 30-year tranche, which many had been expecting, as it was able to raise the amount it wanted in a single 10-year tranche.
"It would have had to pay a higher yield for a 30-year bond as the curve is quite steep. In the end, they managed to raise the $2 billion to $2.5 billion they wanted with the 10-year bond," said one person familiar with the deal.
The bonds printed slightly inside the initial guidance, which was at the area of 5.125%. The whisper was at "low 5%". Indonesia's new bonds mature on May 5, 2021.
According to one investor who spoke to FinanceAsia yesterday evening, the bonds "might trade up a little" in the secondary market. Assuming that US investors who participated hold on to their bonds, this could support their performance in secondary trading.
Given the rivalry between the Philippines and Indonesia, there were natural comparisons made between the strategies adopted by the two sovereigns. Unlike the Philippines, which went for a quick 24-hour execution, Indonesia went for a two-day execution strategy, announcing the deal late Monday morning and letting books build during the course of two days before pricing late last night.
Away from Indonesia, China Liansu has mandated J.P. Morgan and Royal Bank of Scotland for its senior bond. Roadshow presentations will start in Singapore today, move to Hong Kong on Friday, New York on Monday, Boston on Tuesday and London on Wednesday.
Elsewhere, Chaoda Modern Agriculture has mandated Citi and Credit Suisse as joint global coordinators and bookrunners for its international offering of senior bonds. Bank of America Merrill Lynch is also a joint bookrunner. Roadshow presentations start today.
Sino-Ocean Land has mandated BOC International, Goldman Sachs and HSBC for its perpetual bond issue. The roadshow presentations to institutional investors in Asia, Europe and the US started yesterday.