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Sunday, February 25, 2024

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Case study: Indonesia’s private placement cash Waqf Sukuk facilities

The Indonesian government has closed three private placement cash Waqf-linked Sukuk (CWLS) with a combined nominal value of IDR250 billion (US$16.18 million). The three private placement Sukuk are the SW002, SW003 and SW004 offerings. The SW002 closed on the 30th June 2022 while the SW003 and SW004 closed on the 6th October 2022.

The offerings differ in their tenor, issuance size as well as yield and coupon payments. The SW002 facility has a face value of IDR50 billion (US$3.18 million) and carries a yield of 6.52% and a five-year tenor while the SW003 facility has a IDR100 billion (US$6.35 million) nominal value and a yield of 5.9% per annum and a two-year tenor. Also with a IDR100 billion face value, the SW004 facility carries a 6.65% yield with a five-year maturity.

The specific use of funds for the three issuances has yet to be disclosed. It is expected that further information such as the use of proceeds as well as investor breakdown would be detailed in the upcoming Bank Indonesia’s 2022 Cash Waqf Linked Sukuk annual report.

The Wakalah facilities come two years after the inaugural Sukuk offering was issued under the SW series on the 10th March 2020. The development of the Sukuk series, which is the first Sukuk Waqf effort for the Indonesian government, dates back to 2018 and was launched at the IMF–World Bank annual meeting.

The inaugural issuance contributed to the development of Waqf assets and financed free cataract surgery services for a projected 2,513 patients throughout the facility’s five-year tenor.

“This instrument emerged through a spirit of cooperation between authorities, namely the Indonesia Waqf Board, Ministry of Finance, Ministry of Religious Affairs, Bank Indonesia and other stakeholders to advance the Waqf sector in Indonesia,” Sugeng Sugeng, the deputy governor of Bank Indonesia, commented.

The National Shariah Council of the Indonesian Ulema Council issued a Fatwa in 2019 on the Shariah compliance of the CWLS based on a 2002 Fatwa on the general Shariah permissibility of cash Waqf. Since the launch of the private placement CWLS series, the Indonesian government has also launched the SWR series, which is the retail CWLS, with the first retail CWLS issued on the 9th October 2022. To date, the government has issued three retail CWLS with a combined total nominal value of IDR77.3 billion (US$4.91 million). The retail offerings have so far all had consistently shorter maturities of two years each.

Indonesian Government SW002-4 cash Waqf-linked Sukuk

IDR250 billion (US$16.18 million)


30th June 2022
Summary of terms and conditions
Issuer Indonesian government
Size of issue SW002: IDR50 billion (US$3.18 million)
SW003: IDR100 billion (US$6.35 million)
SW004: IDR100 billion
Mode of issue Private placement
Purpose To support development of social investment and productive Waqf in Indonesia
Tenor SW002: Five years
SW003: Two years
SW004: Five years
Issuance size IDR50.85 billion (US$3.29 million)
Profit rate SW002: 5.5%
SW003: 6.65%
SW004: 5.9%
Yield SW002: 6.52%
SW003: 6.65%
SW004: 5.9%
Currency Indonesian rupiah
Maturity date SW002: 30th June 2027
SW003: 6th October 2024
SW004: 6th October 2027
Governing law Indonesian law
Islamic structure Wakalah

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