Despite a delayed issue date in addition to being issued amid volatile market conditions, the Republic of Indonesia’s dollar Sukuk worth US$2.5 billion received an overwhelming response from global and local investors.
Issued through the government’s SPV, Perusahaan Penerbit SBSSN Indonesia III (PPSI-III) established specifically to issue Islamic certificates, the green Sukuk generated an orderbook of US$16.66 billion, nearly 6.7 times above its target.
The issuance is a series of three tranches: two trust certificates with five-year and 10-year tenors worth US$750 million and US$1 billion respectively, and a 30-year tranche worth US$750 million structured under the Wakalah concept. The Sukuk issuance will be listed on both the Singapore Stock Exchange and NASDAQ Dubai, and is rated ‘Baa2’ by Moody’s Investors Service, ‘BBB’ by S&P Global Ratings and ‘BBB’ by Fitch Ratings.
The Sukuk issuance achieved the lowest coupon rate for international Sukuk coming out of Indonesia and is also touted as the largest global Sukuk with a 30-year tenor in the region.
“This transaction received extraordinary demand from qualified and diverse global investors, strengthened the Sukuk market and showed strong investor confidence in Indonesia,” said the government. It saw orders from investors from the Middle East, Malaysia, the US and Europe.
The first tranche in the series — the five-year Sukuk — is a green issuance dedicated by the government to sustainable financing to support its commitment to tackle climate change. The green Sukuk facility is Indonesia’s third issuance in the international market, with the most recent one being a green retail Sukuk facility issued at the end of 2019.
The series is in line with Indonesia’s 2020 financing plan, which includes provisions to handle the impact of the COVID-19 pandemic as well as efforts to further strengthen the country’s position in the international Islamic financial market and also to support the development of Islamic finance in Asia, the government noted.
|Indonesia’s dollar Sukuk|
17th June 2020
|Issuer||Perusahaan Penerbit SBSSN Indonesia III|
|Tranches & structure||Tranche 1: US$750 million; Tranche 2: US$1 billion; Tranche 3: US$750 million (Wakalah)|
|Purpose||Sustainable financing and handling the impact of COVID-19|
|Tenor||Tranche 1: Five years Tranche 2: 10 years Tranche 3: 30 years|
|Profit rate||Tranche 1: 2.3% Tranche 2: 2.8% Tranche 3: 3.8%|
|Joint lead managers/bookrunners||BNP Paribas; Dubai Islamic Bank; HSBC; Maybank; Standard Chartered|
|Joint green structuring advisors||BNP Paribas, HSBC|
|Co-managers||Danareksa Sekuritas, Trimegah Sekuritas Indonesia|
|Underlying assets||State property including land and buildings (51%) and government projects in 2020 (49%)|
|Listing||Singapore Stock Exchange, NASDAQ Dubai|
|Rating||‘Baa2’ by Moody’s, ‘BBB’ by S&P, ‘BBB’ by Fitch|
|Investors||Tranche 1: Asia (40%), Middle East and Malaysia (32%), US (12%), Europe (11%), Indonesia (5%) Tranche 2: Asia (34%), Middle East and Malaysia (31%), US (18%), Europe (12%), Indonesia (5%) Tranche 3: Asia (44%), Europe (33%), Middle East and Malaysia (10%), US (8%), Indonesia (5%)|