Photo for illustrative purposes only. Business district in Jakarta, Indonesia.

Islamic Finance

Indonesia lining up US dollar sovereign sukuk - sources


LONDON - The Republic of Indonesia is preparing its annual US dollar-denominated sovereign sukuk issue, two sources familiar with the government’s plans told Salaam Gateway.

Indonesia plans to bring the Shariah-compliant debt to market within the next two weeks, with an international investor roadshow for next week, said the sources.

Among the international arrangers for the sukuk are Dubai Islamic Bank, HSBC and Standard Chartered Bank, according to the sources.

“They [Indonesia sovereign] have been monitoring the market for a while but [the] coronavirus has dampened market sentiment,” said the first source.

An official at the ministry of finance declined to comment to Salaam Gateway.

Indonesia is rated BBB by S&P Global Ratings and Fitch, and Baa2 by Moody’s.       

The Indonesia government has been issuing sovereign sukuk in the first quarter of the year for the last few years.

It last tapped the international Islamic capital markets in February 2019 when it sold $2 billion in sukuk, comprised of a $750 million five-and-a-half year green sukuk and a $1.25 billion 10-year vanilla sukuk. The green sukuk offered a profit rate of 3.9% and the vanilla sukuk offered a profit rate of 4.5%.

Deutsche Bank, Dubai Islamic Bank, Maybank Investment Bank Berhad, PT Mandiri Sekuritas and HSBC acted as green structuring advisors, joint-lead managers and joint bookrunners for the issuance of the sukuk. PT Bahana Sekuritas, PT Danareksa Sekuritas, and PT Trimegah Sekuritas Indonesia Tbk were the co-managers for the transaction.

In February 2018, Indonesia sold a $1.75 billion 4.4% 2028 sukuk. The sovereign also printed a $1.25 billion 3.75% 2023 green sukuk. Abu Dhabi Islamic Bank, CIMB Islamic, Citigroup, Dubai Islamic Bank and HSBC arranged both transactions.

In March 2017, Indonesia issued a $3 billion dual-tranche wakalah sukuk, consisting of a $1 billion, 3.4% 2022 note and $ 2 billion, 4.15% 2027 piece.

Deutsche Bank, HSBC, Mandiri Securities, National Bank of Abu Dhabi (now First Abu Dhabi Bank), and Standard Chartered acted as the joint lead managers and joint bookrunners. PT Bahana Securities, PT Danareksa Sekuritas, and PT Trimegah Sekuritas Indonesia Tbk acted as co-managers on the deal.

(Reporting by Hassan Jivraj in London; Additional reporting by Yosi Winosa in Jakarta; Editing by Emmy Abdul Alim [email protected])

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Hassan Jivraj