HONG KONG: Indonesia is planning to sell 10- year dollar bonds, tapping global investors to spur economic growth for the second time this year after winning an investment-grade rating.
The notes are being offered to investors to yield about 4.05%, according to a person familiar with the matter, who asked not to be identified because the details are private.
The country is also marketing an increase to its existing 5.25% bonds due 2042, the person said.
The additional notes are being offered at a yield of about 4.982% and that sale will raise at least US$500 million, according to the person.
Indonesia is taking advantage of relative borrowing costs close to an eight-month low as the government plans to spend $53 billion until 2020 to build railways, airports and seaports.
Fitch Ratings raised Indonesia’s ranking by one level to BBB- in December, followed by Moody’s investors Service to Baa3 in January. Both are the lowest investment grades.
“This is a rare issuance with relatively low risk,” said Teddy Satriadi, a Jakarta-based head of fixed income desk at PT Bank Indonesia.
News of the investment grade award is still in investors’ minds and there is demand in the market for dollar- denominated issuance, whether it is corporate or government, he added.
The extra yield investors demand to hold Indonesia’s dollar-denominated securities rather than similar-maturity Treasuries narrowed 37 basis points this year to 213 points, according to an index compiled by JPMorgan Chase & Co.
The spread reached 175 points on March 19, the lowest level since Augustus 5, 2011.
The average yield premium for developing nations’ debt was 339 basis points yesterday, down 38 points this year, according to JPMorgan indices.
Indonesia’s dollar debt returned 14% in the past year, the second-best performance in Asia after the 17% gain on the notes of the Philippines, indexes compiled by HSBC Holdings Plc show.
Five-year credit-default swap contracts on Indonesia’s debt dropped 37 basis points this year to 171 as of April 16, according to data provider CMA, which compiles prices quoted by dealers in the privately negotiated market. (Bloomberg/T03)
Showing 0 - 0 of 0 comments