JAKARTA (TheInsiderStories) – The Indonesian government plans to sliced the issuance of global bonds in 2020, said the official on Tuesday (10/22). Usually, finance ministry give a portion around 20 percent of total net issuances.
This year, the office planned to release government bond with total amount of Rp389.22 trillion (net) to finance the 2020 State Budget. From the total, said he director at the finance ministry, Loto Srianaita Ginting, the government still issue global bonds in US dollar, Euro and Yen denominated.
She continued, the issuance of global bond is also very dependent on global interest rates. The director added, the plan to for issuing global bonds 2020 is still in the exercise phase. She estimates the ministry will publish the strategy and types of the notes around November or December 2019.
Recently, Indonesian has sold two dual-currency government bonds for $750 million in RI0929 series and €750 million in RIEUR0926 series, as a part of state budget financing.
This is Indonesia’ third dual-currency bonds following 2017 and 2018. Maturity for the US Dollar bond is 10 years, while the Euro bond is seven years. Coupon for the Euro bond is 1.45 percent while the US Dollar bond is 3.4 percent. Furthermore, the yield is set as 1.487 percent and 3.45 percent respectively.
The global issuance value of US dollar bonds is smaller than last year’s dual-currency issuance of $ 1 billion. The coupon rate and the yield of global bonds last year were also greater at 4.1 percent and 4.13 percent respectively.
“In this transaction, the RIEUR0926 series was successfully issued with the lowest coupon rate throughout the history of issuance of Euro denominated government bonds,” said official statement.
It is explained that the final pricing for the series is 30 bps lower than the initial target price, mid-swap MS+175 bps area. This is Indonesia’s government sixth Euro government bond and the second in SEC-Registered format, as Indonesia is trying to cover more investors in Europe.
Not only the Euro, but the official also mentioned that the final pricing for RI0929 is 30 bps lower than the initial target at 3.75 percent.
The bond has Baa2 from Moody’s, BBB from Standard & Poor’s, and BBB from Fitch. The official claimed that the Standard & Poor’s rating upgrade was one of the causes of issuing the dual-currency bonds in SEC-Registered format.
Issuance of these government bonds will be listed separately in Singapore Stock Exchange dan Frankfurt Stock Exchange. Joint book-runners for the transaction are Citigroup, Credit Agricole CIB, Deutsche Bank, HSBC, Mandiri Sekuritas, and Standard Chartered Bank. Meanwhile, PT Bahana Sekuritas and PT Trimegah Sekuritas Indonesia Tbk (IDX: TRIM) are the co-managers.
Based on the official data, until this week, the cumulative buying of government bonds by foreign investors reached Rp7.15 trillion. This figure brought government bonds ownership by foreign investors to Rp1,036.54 trillion.
Next year, the government also planned to issue diaspora bonds, which are planned to target Indonesian citizens living abroad or foreigners who have Indonesian ancestry.
US$1: Rp14,100, JPY108.53
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