Indonesia named best Yankee Issuer
Indonesia named best Yankee Issuer
JAKARTA (JP): The Euromoney financial magazine has named
Indonesia as the "Best Yankee Issuer of the Year" for its
inaugural Yankee bond issue of US$400 million earlier this year.
The London-based magazine said in its December edition's "Asia
Best" supplement that the pricing of Indonesia's Baa/BBB-rated
10-year bonds, at 100 basis points above U.S. treasury bills, was
considerably tighter than comparable and higher rated credits.
"For instance, bonds issued by China, which is rated higher
than Indonesia, were at the time trading at 108 basis points over
Treasuries," it said.
Bank Indonesia (the central bank), acting on behalf of the
government, launched the $400-million Yankee bond issue on July
25. The issue, managed by U.S. investment bank Salomon Brothers,
received a warm response, with 50 investors taking up the offer.
The magazine said Indonesia's first Yankee issue had met the
government's objective of creating a large liquid Indonesian
benchmark on the international market and helped lower Indonesian
corporate spreads in the United States by more than 20 basis
points.
The award was announced during an Asia-Pacific issuers and
investors forum, organized by Euromoney, in Hong Kong on Dec. 2
and Dec. 3.
Bank Indonesia managing director Paul Sutopo Tjokronegoro said
at the award ceremony that the government felt it was necessary
to set a benchmark to would support private borrowing.
"By using this issue to set a benchmark, it was expected that
there would be an immediate impact on the borrowing spreads for
all Indonesian borrowers," Paul said in his response to the
award.
"The existence of such a reference will help national
borrowers looking overseas for funds to negotiate their terms and
conditions with lenders and investors," he added.
The magazine wrote that the establishment of a sovereign
benchmark would help those Indonesian companies -- particularly
those producing pulp and paper -- that had successfully accessed
high-yield investors in the U.S. market in recent years but had
suffered from wildly fluctuating spreads.
Many of them had paid rates as high as between 600 and 700
basis points over U.S. Treasuries because of the absence of a
sovereign benchmark and ratings.
One likely beneficiary from the new benchmark is Sampoerna
International Finance Co., a financier for clove cigarette
manufacturer PT HM Sampoerna.
The company this year issued $200 million worth of 10-year
guaranteed notes at 145 basis points above U.S. Treasuries and
with a Baa3/BBB investment-grade rating, the first Indonesian
company to achieve this.
But the benchmark did not significantly affect the $195-
million issue by PT Tripolyta Indonesia in November, which was
priced 540 basis points over U.S. Treasuries. (rid)