Analyst says Danantara's maiden bond issuance proves investor confidence
Public policy observer Feiral Rizky Batubara believes that the strong investor interest in Danantara Investment Management’s (DIM) primary international bonds serves as a signal that the global market still maintains confidence in Danantara’s credibility.
According to him, the market’s response to the dollar-denominated instrument is reflected not only in the issuance value of $1.5 billion USD but also in the massive demand received during the offering process.
“The strong demand is evident from transactions that were initially targeted at $1 billion USD, but subsequently recorded a peak order book of approximately $4.6 billion USD, and were ultimately increased to $1.5 billion USD,” Feiral stated in Jakarta on Wednesday.
He noted that such high demand demonstrates the market’s appetite for these bonds, particularly as additional demand originated from investors in the United States, Europe, and the Middle East.
In his view, the combination of high demand and competitive yields indicates that the market is not merely responding positively but also considers the instrument a worthy addition to global investor portfolios.
“A primary bond issuance in the international market is a test of credibility, especially when conducted amidst challenging global conditions. The success of DIM in raising $1.5 billion USD shows that Danantara, as an institution, possesses promising prospects, strong institutional support, and a strategic role in the national development agenda,” said Feiral.
Feiral assessed that amidst global geopolitical uncertainty, investors tend to be more selective in allocating funds, particularly in emerging markets perceived to have higher risks. Therefore, the high demand for DIM bonds signals a positive outlook regarding Danantara’s investment management direction.
In addition to high market demand, Feiral stated that the success of DIM’s inaugural international bond issuance is supported by its investment-grade ratings, specifically BBB from S&P Global and Baa2 from Moody’s. These ratings place DIM’s bonds in an investable category with moderate risk.
Investment-grade status is a crucial factor considered by institutional investors when making investment decisions.
“The Baa2 and BBB ratings act as an entry ticket to the global market. For many international investors, including fund managers, insurance companies, and pension fund managers, ratings are the primary basis for assessing risk, determining portfolio allocation, and deciding whether an instrument is worth holding,” he said.
Nevertheless, this recognition brings the consequence of increased investor expectations regarding the quality of governance, transparency, and risk management implemented.
“This global investor confidence must be understood as a mandate, not merely an achievement. The funds raised must be managed with discipline, transparency, and productivity to ensure they can generate a real economic impact for Indonesia,” Feiral remarked.
He expressed hope that the proceeds from the bond issuance could be directed towards strategic sectors with significant multiplier effects on the economy, such as industrial downstreaming, energy, infrastructure, and projects capable of creating jobs and increasing national value-add.
As previously reported, on 12 June, Danantara Indonesia, through DIM, announced the successful issuance of its inaugural international bonds worth $1.5 billion USD.
The bonds were issued with a peak order book reaching $4.6 billion USD, reflecting high global investor interest in the offered instruments.