A government statement showed Indonesia had raised $1.84 billion from the sale of bonds denominated in U.S. dollars and euros. Documents show that part of the proceeds is to repurchase outstanding dollar bonds.
This is the country’s first buy-back offer for dollar bonds. Analysts said it might be to manage liquidity ahead of U.S. tapering.
According to term sheets, Indonesia sold $600 million of 10-year bonds with a 2.18% yield and $625 million in its first 40-year bonds with a 3.28% yield.
The money will be used to finance a tender offer for eight existing bonds that will mature between 2022 to 2026. The offer runs until Friday.
The repurchase offer appeared to be an effort to reprofile its debts, said Handy Yunianto, fixed income analyst for Mandiri Sekuritas. That is, to reduce refinancing risks with longer-tenor bonds that lock at a now relatively low yield, he said.
He said the offering prices were relatively in line with market prices. Moreover, the strategy may link to expectations of higher interest rates when the U.S. Federal Reserve begins reducing pandemic-era asset purchases, he added.
In its maiden sale of euro-denominated bonds, Indonesia has also raised 500 million euros ($590.7 million). The finance ministry’s debt department said that it was to fund its efforts to achieve sustainable development goals on Tuesday.
The euro bonds have a 12-year maturity and a 1.351% yield. The ministry said they are among Asia’s first SDG bonds and received high interest from investors.
Indonesia’s 2022 GDP Growth Target at 5.2%
The Southeast Asian country’s parliament’s budget committee and the government have agreed to set a 2022 economic growth target of 5.2%. On Tuesday, the committee’s chair, Said Abdullah, said it is roughly the midpoint of President Joko Widodo’s proposal for 5.0%-5.5%.
They also tentatively agreed to raise the 2022 spending plans to 2,714.2 trillion rupiahs ($190.31 billion). Assuming around the same increase in revenues, that would be up slightly from the president’s proposal in August of 2,708.7 trillion rupiahs.
A GDP of 4.85% remains as the budget deficit target. For the 2022 budget, a wider parliamentary vote is required.