JAKARTA (TheInsiderStories) – Indonesian government back into the global bond market by offered US Dollar-denominated trust certificates (SUKUK), it said today (05/17). Moody’s Investors Service has assigned Baa2 backed senior unsecured ratings to the planned global SUKUK to be issued by the government under its existing US$25 billion trust certificate issuance program.
The ratings apply to all the proposed tranche issuances, including those with maturities in 2025, 2030 and 2050. According to the terms and conditions available to Moody’s, the trust certificates will constitute direct, unconditional and unsubordinated obligations of the Government of Indonesia.
Last April, the government has issued three series of global bonds with values of $4.3 billion, the largest amount in the history of Indonesian global bond issuances. The ministry of finance released Series RI1030 with a 10.5-years tenure with a nominal values of $1.65 billion and yields 3.9 percent.
Then, Series RI1050 has a 30.5-years tenure with worth of $1.65 billion and yield 4.25 percent. Third, Series RI0470 has a tenure of 50 years with values of $1 billion and a yield of 4.5 percent. These three series of global bonds issued received Baa2 ratings from Moody’s, BBB from Standard & Poor’s, and BBB from Fitch, and were listed on the Singapore Stock Exchange and Frankfurt Stock Exchange.
This year, Indonesian government also looking to sell Samurai and Eurobonds in the second semester of 2020 to fund the fiscal deficit. Until April, the ministry has issued more than $20 billion of state bond, including the global bond.
“”There are plans to issue Samurai and Eurobonds in the second half,” a director at finance ministry, Deni Ridwan recently but he reject to specify the amount and the date of the issuances.
In Moody’s opinion, Indonesia’s Baa2 rating is underpinned by a number of credit strengths, including robust and stable growth rates and a low government debt burden, preserved by consistent fiscal discipline and emphasis on macroeconomic stability as well as persistent credit challenges.
These comprise a very weak revenue base that constrains debt affordability, the government’s reliance on external market funding that exposes its balance sheet and the economy to changes in foreign investor sentiment, and an economic structure that remains vulnerable to commodity cycles.
The agency expects that reforms aimed at reducing a number of structural economic and fiscal constraints will continue, albeit at a gradual pace, similar to the relatively slow progress achieved in the last few years. The stable outlook reflects balanced risks at Baa2, mainly related to the pace and effectiveness of reforms.
Significant delays or reversals in reforms would risk undermining Indonesia’s growth potential and macroeconomic stability. Conversely, more effective reforms than Moody’s currently expects would improve competitiveness, raise growth potential and strengthen Indonesia’s external position.
Earlier, finance minister Sri Mulyani Indrawati revealed, beside from the bond issuances, the budget deficit and other spending will finances from the surplus budget Rp70.46 trillion, endowment funds, public service agencies, private placements from state-owned enterprises, Indonesia Deposit Insurances, Hajj Fund, others, as well as multilateral loans up to $8 billion.
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