JAKARTA: Indonesia sovereign wealth fund Danantara’s success in raising US$1.5 billion in its debut international bond offering reflects investors’ confidence in the country’s economic outlook, two top officials said on Monday (Jun 15).“Initially, we planned to raise US$1 billion, but orders reached approximately US$4.6 billion during the book-building process," said Indonesia’s Investment and Downstream Minister Rosan Roeslani, who is also Danantara’s chief executive officer."Given the strong demand, we decided to increase the issuance size from US$1 billion to US$1.5 billion, split evenly between five-year and 10-year tenors," news outlet The Jakarta Post quoted him as saying during a press conference at the Presidential Palace.Book-building is the process of generating, capturing and recording investor demand for shares.
"This also proves that investor confidence in Indonesia is high," said Rosan. Echoing these comments on investor confidence, State Secretariat Minister Prasetyo Hadi also said at the press conference that the Prabowo Subianto government would continue to take steps to strengthen economic fundamentals and improve Indonesia’s investment climate. The ministers' comments came on the back of recent market turbulence and a decline in the rupiah, along with closer scrutiny of the government’s fiscal policies which have incited student protests in recent days.The press conference came a day after President Prabowo’s instruction to publicise positive developments in the country’s investment landscape, media outlets reported.The five-year Danantara bonds carried a yield of 5.35 per cent while the 10-year tranche was priced to yield 5.95 per cent. The robust demand allowed Danantara to lower final yields by 35 basis points from initial price guidance, Reuters earlier reported.Rosan said the final pricing exceeded market expectations, particularly given concerns that Danantara's debut issuance could face weak demand or require significantly higher borrowing costs."Many people predicted that nobody would want to buy the bonds, or that we would have to offer very high rates. Neither of those happened," he said."This demonstrates that the credibility of both Danantara and the government remains strong, especially when we engage investors openly and transparently and clearly communicate our future plans.”
