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Thursday, July 18, 2024

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Case study: Indonesia’s retail green savings Sukuk

The Indonesian government issued the retail green savings Sukuk facility ST011T2 on the 13th December 2023 worth IDR5.5 trillion (US$353.94 million). The facility was issued through the Directorate General of Budget Financing and Risk Management (DJPPR), which issues budget-financing Sukuk under the Indonesian Ministry of Finance.

The two-year green retail savings Sukuk facility was issued alongside a four-year vanilla savings Sukuk facility which recorded IDR14.5 trillion (US$933.1 million) in orders. The issuance follows the pattern of the DJPPR’s previous ST010T2 issuance in June 2023.

According to the Indonesian government, the issuance of retail green Sukuk is part of its commitment to help reduce the impact of climate change. The proceeds from the issuance will be used to finance environmentally friendly projects under the national budget.

The purchase orders, which were submitted via the government’s electronic system, were coordinated through the government’s 32 distribution partners, including banks and financial institutions.

The facility, including the non-green tranche, primarily saw participation from private employees with self-employed employees contributing to over 30% of the order volume.

Based on gender, the investors for the Sukuk were predominantly female, standing at 52.16% for the green tranche. Notably, female investors contributed to more than half of the book order for the green Sukuk while the non-green tranche saw a larger proportion of participation from male investors, who contributed to 56.14% of the book order.

The participation of female investors in the green Sukuk is in line with Indonesia’s ST010T2 facility issued six months prior where female investors accounted for 52.75% of total investors. Compared with the ST010T2 facility, female investors contributed to a larger portion of the total book order of the present green Sukuk at 51.88% in contrast to the 42.36% recorded for the June 2023 issuance.

In addition to retail green Sukuk, DJPPR is also an issuer of cash Waqf-linked Sukuk facilities in both retail and private placement formats.

Indonesian Government ST011T2 Green Savings Sukuk

IDR5.5 trillion (US$353.94 million)

13th December 2023
Summary of terms and conditions
Indonesian government
Size of issue
IDR5.5 trillion (US$353.94 million)
Mode of issue
To finance environmentally friendly projects
Four years
Profit rate
Indonesian rupiah
Maturity date
13th December 2027
Governing law
Indonesian law
Islamic structure
Underlying asset
Sovereign assets and green projects under the 2023 national budget
Non-tradable, non-transferable
Face value/minimum investment
IDR1 million (US$64.35)

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