Key facts
- Indonesia's sovereign wealth fund Danantara has begun its debut global dollar bond sale.
- The fund is seeking to sell benchmark-sized notes with five and 10-year maturities.
- Danantara is also planning a separate rupiah-denominated bond offering with a 3% coupon.
- The bond issuance follows legislative approval for Danantara to issue strategic financing instruments.
- Proceeds from the dollar bond sale may be used to refinance a $1 billion loan.
Indonesia's sovereign wealth fund, Danantara, has initiated its debut global dollar bond sale, aiming to attract investors despite a recent selloff in the nation's markets. The fund is testing investor appetite with benchmark-sized notes in a two-part offering featuring five and 10-year maturities.
This move comes as policymakers intensify efforts to stabilize Indonesian markets. Danantara's roadshow includes meetings with investors in Boston and New York. Some investors were informed that a portion of the bond proceeds could be used to refinance a $1 billion loan secured earlier this year.
Separately, Danantara is preparing a rupiah-denominated bond offering with a fixed coupon rate of 3%, significantly below prevailing market rates. This plan follows legislative approval from the Indonesian House of Representatives for revisions to the Financial Sector Development and Strengthening Law, which explicitly authorizes Danantara to issue strategic financing instruments like "Merah Putih Bonds."
Concerns have been mounting among global investors regarding Indonesia's economic outlook and policy direction, particularly following the introduction of interventionist policies by President Prabowo Subianto's administration. These include a proposal to centralize exports of strategic commodities under a Danantara-controlled entity.
Danantara has denied rumors that individuals or business owners with assets above Rp3 billion would be legally required to purchase the "Merah Putih Bond," with COO Dony Oskaria and Finance Minister Purbaya Yudhi Sadewa affirming that participation will be voluntary.