Government of Indonesia to commence roadshow on global Sukuk - IFN

Government of Indonesia to commence roadshow on global Sukuk

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INDONESIA: It has been reported that the government of Indonesia has mandated banks to carry out roadshows later this week for its upcoming global Sukuk which is expected to be worth between US$1-2 billion. Speaking to Islamic Finance news, a source close to the government’s upcoming global sovereign Sukuk deal — its third, following November 2011’s US$1 billion issuance — says that the Sukuk will be structured according to RegS/144A and will be marketed to investors in Europe and “possibly” the US. The Sukuk, which is slated before the end of this year, will be similar to the 2011 deal, the source adds, with the exception that it is likely to be listed in Europe, as opposed to the Singapore Stock Exchange which was the case in the prior issuance. The papers will be issued by the Indonesian government to fund its budget deficits. The proposed sovereign Sukuk issued has been rated at ‘BBB-(EXP)’ by Fitch Ratings, and will be issued by Perusahaan Penerbit SBSN Indonesia III. According to Fitch, the expected rating is in line with the republic’s long-term foreign currency issuer default rating of ‘BBB-’ which carries a stable outlook. Fitch is also of the view that cash-flows supporting payment on the proposed issuance comprises of direct unconditional, unsecured and general obligations of the republic, which also reflect Indonesia’s unsecured and unsubordinated marketable external debt. Increased government spending and debt is said to have muted the country’s year-on-year GDP to 5.81% in the second quarter of 2013, down from 6.02% recorded in the first three months of the year. The republic is currently rated at ‘BB+’ and ‘Baa3’ by S&P and Moody’s, respectively, with a stable outlook. Indonesia last came to market with a US$1 billion global Sukuk on the 14th November 2011, which held a seven year tenor and a coupon of 4%. The issuance, which received a ‘Ba1’ rating by Moody’s, had received overwhelming response from investors in the Middle East, Asia and Europe to reach an excess of US$6.5 billion in its order books.