Indonesia swoops in with $3 billion bond

Indonesia raises $3 billion in a dual-tranche bond that is expected to conclude its conventional offshore funding needs for the year.

The Republic of Indonesia priced a $3 billion dual-tranche bond early Tuesday morning, swooping into debt markets and getting the bulk of its offshore funding needs done and dusted early in the year. The deal size was split evenly between a 10- and 30-year tranche.

“Indonesia is expected to raise $3 billion to $5 billion through offshore markets, so this should conclude its fund raising in conventional format,” said one source. “It might issue in sukuk format later this year,” he added.

Indonesia had held roadshows during the first week of March but held off launching a trade immediately after, a strategy that has worked in its favour in recent times. In the past, the sovereign used to telegraph a deal to investors, its secondary bonds would widen and it would print off those levels.

Indonesia bond yields had risen significantly following the announcement of the roadshow and the sovereign waited for bond yields to fall nearly 30bp before launching a trade.

The 10-year bonds priced at a yield of 3.50%, about 12.5bp inside of initial guidance, which was at the area of 3.625%. The 30-year bonds priced a yield of 4.75%, about 20bp inside of initial guidance at the 4.95% area.

Both tranches traded at par in secondary, rising more than one point above the reoffer.

US investors were allocated the majority of the bonds and several key anchor orders from large US investors helped drive pricing on the deal. For the 10-year tranche US investors were allocated 50%, Indonesian investors 13%, Asia excluding Indonesia 17% and European investors 20%. For the 30-year tranche, US investors were allocated 56%, European investors 27%, Asia excluding Indonesian investors 13% and Indonesian investors 4%

Each tranche attracted $6.25 billion worth of orders, with 235 investors participating in the 10-year tranche and 255 investors participating in the 30-year tranche.

The 10-year piece offered a coupon of 3.375% — the lowest for a 10-year conventional Indonesian bond. The 30-year piece offered a coupon of 4.625% — the lowest for a 30-year Indonesian bond.

For the 10-year tranche, asset managers were allocated 68%, banks 18%, insurance 11% and private banks 11%. For the 30-year tranche, asset managers were allocated 81%, insurance 9%, banks 8% and private banks 2%.

Deutsche Bank, J.P. Morgan and Standard Chartered were joint bookrunners.

¬ Haymarket Media Limited. All rights reserved.
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