JAKARTA: Indonesia has chosen Barclays Capital, HSBC and Standard Chartered Bank to arrange its maiden sale of US-dollar denominated global Islamic bonds set to take place in October or November, a person close to the deal told Dow Jones Newswires yesterday.
The three were selected out of a shortlist of six banks that also included Citigroup, Deutsche Bank and Lehman Brothers.
The offering, likely to be for up to $1bn, comes with Indonesia looking for new ways to finance its growing budget deficit, forecast to hit 1.8% or more of gross domestic product this year – and in a belated attempt to kickstart the Shariah-compliant financing sector in the world’s most populous Muslim nation.
The US dollar Islamic bond, or sukuk, will follow on the heels of the government’s debut local-currency Islamic bond.
Lead managers PT Danareksa Sekuritas and Mandiri Sekuritas are currently marketing that deal which is set to raise 5tn rupiah ($537mn) or more through the sale of seven- and 10-year bonds.
Both offerings will apply the ijarah leasing structure backed by 18tn rupiah in land and buildings. The US dollar bonds are also likely to have tenors of seven to 10 years.
Indonesia’s January 2018 conventional US dollar bond, which will act as a pricing benchmark for the upcoming US dollar sukuk, was trading yesterday at a 6.9% yield while its January 2016 bond was at a 6.76% yield.
However, Brayan Lai, a credit analyst at Calyon in Hong Kong, said that the new issue premium for US dollar bonds in Asia and elsewhere has been recently in the range of 50-80 basis points and selling a sukuk may cost a bit more still.
“It could be more for Indonesia’s US dollar sukuk,” Lai said.
Islamic bonds are structured to comply with Shariah, or Islamic law, which bans interest as well as investment in taboo activities such as gambling and pork production. – Dow Jones Newswires |
