Danantara Issues Global Bonds, Targets US$1 Billion

The Daya Anagata Nusantara Investment Management Agency (BPI Danantara), through PT Danantara Investment Management (DIM), has issued global US dollar-denominated bonds for the first time. This move represents a crucial test of foreign investor interest in Indonesian assets amidst mounting domestic economic challenges.

Citing Business Times based on Reuters marketing documents, the bonds have two tenors, namely 5 and 10 years. Each series is targeted to raise approximately US$500 million, bringing the total potential issuance value to US$1 billion.

During the bookbuilding process, Danantara set final price guidance at 5.35% for the 5-year bonds and 5.95% for the 10-year bonds. These yield levels are 35 basis points lower than the initial indications, which were around 5.7% for the five-year tenor and approximately 6.3% for the ten-year tenor.

The global debt issuance took place during a crucial period for Indonesia. A number of foreign investors are still scrutinising domestic economic developments, particularly after the rupiah exchange rate came under pressure recently. On the other hand, various policies by President Prabowo Subianto perceived as expansionary have also become a focus for the market in gauging Indonesia’s investment risk profile.

In response to the weakening domestic currency, Bank Indonesia previously took steps by raising its benchmark interest rate by 25 basis points to 5.5%. The aim was to maintain rupiah stability after it briefly touched a record low against the US dollar.

Concerns are also mounting regarding the expansion of Danantara’s mandate, as the state-owned enterprise wealth manager was recently tasked with becoming the sole exporter of palm oil, coal, and ferroalloy starting next September through a newly formed unit.

From a valuation perspective, Danantara’s bond yields are above those of Indonesian government dollar bonds maturing in 2036, which last traded at 5.6%. Meanwhile, PT Pertamina’s US dollar bonds with a tenor until 2031 were recorded offering a yield of around 5.27%, based on LSEG data.

Proceeds from the US dollar bond sale will be used for general corporate purposes, including investment and refinancing existing debt. The bonds are issued under a US$5 billion Global Medium-Term Notes (GMTN) programme and are expected to receive a ‘Baa2’ rating from Moody’s and ‘BBB’ from S&P and Fitch. The companies appointed as joint bookrunners and joint lead managers for the transaction are Citigroup, DBS, HSBC, Mandiri Securities, and Standard Chartered.