JAKARTA: State asset fund Danantara’s inaugural international bond offering, which was three times oversubscribed, reflects growing confidence in Indonesia’s economic outlook and the fund’s investment strategy, according to Danantara chief executive officer Rosan Roeslani.
“We met around 122 investors from various countries during the roadshow. Initially, we planned to raise US$1bil, but orders reached approximately US$4.6bil during the book-building process,” Rosan said during a press conference at the Presidential Palace on Monday.
“Given the strong demand, we decided to increase the issuance size from US$1bil to US$1.5bil, split evenly between five-year and 10-year tenors.”
The announcement came a day after President Prabowo Subianto instructed Rosan, who also serves as Investment Minister, to publicly communicate positive developments in Indonesia’s investment landscape.
The bond issuance comprises a US$750mil five-year tranche carrying a yield of 5.35% and a US$750mil 10-year tranche priced at a yield of 5.95%.
Rosan said the final pricing exceeded market expectations, particularly given concerns that Danantara’s debut issuance could face weak demand or require significantly higher borrowing costs.
“Many people predicted that nobody would want to buy the bonds, or that we would have to offer very high rates. Neither of those happened,” he said.
“This demonstrates that the credibility of both Danantara and the government remains strong, especially when we engage investors openly and transparently and clearly communicate our future plans.”
Investor participation was broadly diversified across regions, according to Rosan. For the five-year notes, investors from the United States accounted for 38% of allocations, followed by Europe and the Middle East at 41% and Asia at 21%, respectively.
Meanwhile, US investors took 52% of the 10-year tranche, with Europe and the Middle East accounting for 31% and Asia representing 17%.
Rosan noted that the investor composition differed from previous Indonesian bond issuances, which have historically attracted a larger share of Asian investors.
The five-year tranche generated final orders exceeding US$1.45bil from 68 accounts, while the 10-year tranche attracted more than US$1.35bil from 63 accounts.
Danantara also said the bonds were priced at relatively tight spreads to Indonesia’s sovereign bond curve, which, it claimed, reflected investor confidence in the institution’s credit profile and governance despite its lack of a prior international issuance track record.
The transaction was signed on June 11, with the proceeds expected to be transferred to Danantara’s account tomorrow, Rosan said.
The agency has been criticised for its lack of financial disclosure, despite being entrusted with managing dividends from state-owned enterprises and potentially receiving capital injections from the state budget.
Meanwhile, State Secretary Prasetyo Hadi said President Prabowo had reiterated the need to accelerate deregulation efforts to improve Indonesia’s investment climate and economic competitiveness.
He added that the president had also stressed the importance of downstream processing and industrialisation in strengthening Indonesia’s economic fundamentals and supporting the rupiah.
He noted that export and import performance was closely linked to the success of the government’s industrialisation agenda, which aimed to reduce dependence on imported goods while increasing the value added of domestic products.
“Through downstreaming and industrialisation, we hope to create products with higher added value that can generate greater wealth for the nation,” Prasetyo said. — The Jakarta Post/ANN
