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Wednesday, 23 March 2016

Indonesia $2.5b dollar sukuk 3.1 times oversubscribed

Jakarta: Indonesia raised $2.5 billion (Dh9.2 billion) from its sale of dollar Islamic bonds and got orders for 3.1 times the amount offered, according to a person familiar with the issuance.
The Southeast Asian nation sold $750 million of five-year sukuk and $1.75 billion of 10-year notes priced at 3.4 per cent and 4.55 per cent, respectively, said the person, who isn’t authorised to speak publicly and declined to be identified. Bids totaled $7.7 billion. Indonesia sold $2 billion of such debt due in 2025 at its previous offering last year at a coupon rate of 4.325 per cent and received orders for $6.8 billion, or 3.4 times the offer.
The Southeast Asian nation’s bonds have attracted more than $3 billion of inflows this quarter as the Federal Reserve said it’s only likely to raise interest rates twice in 2016 instead of the four previously envisaged, helping retain Indonesia’s yield advantage over US debt. The rupiah is also turning into a regional top performer after a more than 10 per cent slump in 2015 that pushed it beyond 14,000 a dollar for the first time since the Asian financial crisis.
“Indonesia timed its sukuk issuance to perfection as it comes after the dovish Fed’s statement,” said Hasif Murad, an investment manager at Kuala Lumpur-based Aberdeen Islamic Asset Management, whose parent company oversees the equivalent of $2.9 billion.The fact that Indonesia is the darling of Asia also helps.

A Bloomberg index of emerging-market dollar bonds has climbed 5.5 per cent this quarter, set for the biggest three-month gain since September 2012. And with Malaysia said to be planning another global sukuk, the outlook for Islamic note sales worldwide is already looking brighter than last year.
Issuance to date is $10.2 billion, exceeding last quarter’s $9.9 billion, based on Bloomberg-compiled data. Total offerings for all of 2015 dropped 29 per cent to $35.4 billion in the poorest showing since 2010.
The yield on Indonesia’s 2025 Islamic bonds issued last year rose one basis point to 4.41 per cent as of 11:39 am in Jakarta, less than the 4.95 per cent they were paying at the end of last year, data compiled by Bloomberg show. There’s no pricing available yet for either of the two new notes. The rupiah has appreciated 4.7 per cent versus the dollar in 2016, second only to a 6.6 per cent gain in Malaysia’s ringgit among Southeast Asia’s most-traded currencies.

(Gulf News Market / 23 March 2016)
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