Launch Partners

Thursday, December 8, 2022

Launch Partners

Case study: Indonesia’s first retail cash Waqf-linked Sukuk

The Indonesian government opened its first retail cash Waqf-linked Sukuk (CWLS) series SWR001 on the 9th October 2020, raising IDR14.91 billion (US$979,799) in funds. The two-year offering based on the Wakalah structure with a fixed rate of 5.5% per annum and monthly coupon payments closed on the 12th November 2020.

The inaugural retail issuance followed the Indonesian government’s landmark private placement cash Waqf-linked Sukuk offering issued in March 2020. The underlying assets for the retail Sukuk include state-owned assets and projects and activities under the 2020 National Budget.

According to a statement from the Indonesian Directorate General of Budget Financing and Risk Management, the issuance was part of the government’s efforts to support the national Waqf initiative and assist the development of social investment and productive Waqf in the country.

The retail CWLS series is expected to create inclusive and sustainable economic growth through poverty eradication and inequality reduction and contribute to increasing productivity. The auction was conducted offline with Mandiri Syariah Bank, Bank BRISyariah, Bank Muamalat and BNI Syariah Bank acting as government-appointed distribution partners.

Bank Indonesia noted in the first annual Cash Waqf-Linked Sukuk report that the success of the SWR001 issuance was curtailed by the COVID-19 pandemic as well as low public literacy. The central bank maintained that the potential for retail cash Waqf is considerable. As such, the government has committed to increasing literacy and making the offering more affordable.

The government has since closed the third issuance under its retail CWLS series on the 7th July 2022, which was its largest orderbook, raising IDR38.25 billion (US$2.51 million) in funds. It issued the second issuance in June 2021. The inaugural retail issuance is set to mature on the 10th November this year.

Indonesian Government SWR001 cash Waqf-linked Sukuk

IDR14.91 billion (US$979,799)

12th November 2020
Summary of terms and conditions
Issuer
Indonesian government
Size of issue
IDR14.91 billion (US$979,799)
Mode of issue
Retail
Purpose
Funding social projects
Tenor
Two years
Profit rate
5.5% per annum
Payment
Monthly
Currency
Indonesian rupiah
Maturity date
10th November 2022
Governing law
Indonesian law
Islamic structure
Wakalah
Minimum investment
IDR1 million (US$65.71)
Underlying asset
Government assets and projects
Investor breakdown
Individual investors, institutional investors

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