Indonesia 5/10-year dollar sukuk priced at 3.7% to 4.8%

  • Business
  • Tuesday, 22 Mar 2016

Rupiah recovers: A teller counts rupiah bank notes at a money changer in Jakarta. The rupiah is one of South-East Asian’s best-performing currencies this year. – Reuters

KUALA LUMPUR: Indonesia's benchmark-sized offering of five- and 10-year Islamic bonds will probably price around 3.7% to 4.8%, according to people familiar who asked not to be identified because the details aren’t public yet.

The South-East Asian nation issued US$2bil of dollar sukuk due in 2025 last year, its fifth offering of global syariah-compliant notes, at a coupon rate of 4.325% and received bids totalling US$6.8bil.

It's an opportune moment to tap the market amid uncertainty as to whether a rally in assets of less-developed countries can last.

Indonesia's rupiah is benefiting too.

It is one of South-East Asia's best-performing currencies this year after a more than 10% slump in 2015, when it weakened beyond 14,000 a US dollar for the first time since the Asian financial crisis.

A Bloomberg index of emerging-market dollar bonds has climbed 5.4% this quarter, set for the biggest three- month gain since September 2012.

And with Malaysia said to be prepping a similar global sukuk, the outlook for sales worldwide is already looking brighter than last year. Issuance to date is US$7.6bil, approaching last quarter's US$9.9bil, based on Bloomberg-compiled data.

Total offerings for all of 2015 dropped 29% to US$35.4bil in the poorest showing since 2010.

Indonesian bonds have drawn a net US$3.1bil of investment this year, while the rupiah appreciated 4.7% versus the dollar. Only Malaysia's ringgit has done better with a 5.4% gain.

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Business , Indonesia , Islamic bonds


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