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Saturday, April 20, 2024

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Case study: Indonesia’s fourth retail green savings Sukuk

The Indonesian government closed the offer period for its ST009 green savings Sukuk on the 30th November 2022, receiving overwhelming orders amounting to IDR10 trillion (US$640.64 million) from 35,397 investors. The online retail offering is the fourth green issuance under the Sukuk Tabungan (ST) national savings Sukuk series.

The two-year Wakalah-based facility features a floating rate with a coupon rate floor of 6.15% for three months. Subsequently, the facility will offer the Bank of Indonesia (BI) seven-day reverse repo rate plus a spread of 140bps.

The government will finance environmentally friendly projects including sustainable transportation and climate change mitigation projects, as outlined in the SDG Government Securities Framework. The projects are expected to reduce greenhouse gas (GHG) emissions, although the projected GHG emissions reduction has not been specified.

The Sukuk facility was offered online to enable individual investors to contribute to climate change mitigation actions in addition to contributing to funding national development. The facility was offered through a network of 33 distribution partners comprising banks and non-bank financial institutions.

The offering generated strong participation from millennial investors, representing 53.89% of total investors while Generation Z investors represented 1.97% of total investors. While the issuance is the fourth green offering under the ST series, 37.89% of investors who purchased the Sukuk were new investors, with millennials representing 65.38% of new investors.

The retail green Sukuk offering is the fourth green offering under the ST program. The first retail green savings Sukuk offering, ST006, opened  for subscription on the 1st November 2019 and matured on the 10th November 2021. Considering the consistent green offerings under the program following the ST006 Sukuk, we can expect the program to play a vital role in funding green projects through the retail investor base.

In addition to retail green Sukuk offerings under the ST program, the Indonesian government has also issued three retail cash Waqf-linked Sukuk under the Sukuk Wakaf Retail (SWR) series, channeling retail funding toward Waqf development. Subscription began on the 9th October 2020 for the first facility under the SWR series which had a maturity date of the 10th November 2022. 

Indonesian Government ST009 green savings Sukuk

IDR10 trillion (US$640.64 million)

30th November 2022
Summary of terms and conditions
Indonesian government
Size of issue
IDR10 trillion (US$640.64 million)
Mode of issue
Finance and refinance environmentally friendly projects
Two years
Issuance price
Profit rate
BI seven-day reverse repo rate plus 140bps spread
Indonesian rupiah
Maturity date
10th November 2024
Governing law
Indonesian law
Islamic structure
Underlying asset
Sovereign assets and green projects under the 2022 national budget
Non-tradable, non-transferable
Face value/minimum investment
IDR1 million (US$64.06)

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