Indonesia's Danantara unit raises $1.5 bln as debut dollar bond draws strong demand (updated)

Citigroup

Fri 24:44

Orders peaked at around $4.6 billion, Danantara says 
Final yields tightened 35 basis points from guidance
Sale tests demand as investors watch Indonesian risks
Adds analyst comment, investor allocation details, Danantara statement and market context throughout
By Yantoultra Ngui, Rae Wee and Tom Westbrook

    SINGAPORE, June 12 (Reuters) - A unit of Indonesia's sovereign wealth fund Danantara raised $1.5 billion in its debut U.S. dollar bond sale, drawing strong global demand in a closely watched test of investor appetite for the country's assets during a period of market stress.

        Danantara Investment Management sold $750 million in five-year bonds and $750 million in 10-year bonds, a term sheet seen by Reuters early on Friday showed.

    The order book peaked at around $4.6 billion, Danantara 
    said on Friday
    , pointing to "strong confidence" from international finance markets that it said should also bolster confidence among domestic investors towards its institutional framework.
Reuters reported on Thursday, citing three sources with knowledge of the matter, that Danantara was looking to raise about $1 billion, split equally between the two maturities.
The five-year bonds were priced to yield 5.35%, while the 10-year bonds were priced to yield 5.95%. The robust demand allowed the company to lower final yields by 35 basis points from initial price guidance.

    Winson Phoon, a fixed income analyst at Maybank in Singapore, said the transaction was "a decent print" given domestic headwinds and Danantara's limited track record as a relatively new name.
  

    "Ultimately its strategic importance to the administration carries more weight," Phoon said, adding that pricing appeared reasonable at around 10 to 20 basis points above the Indonesian sovereign dollar bond curve. 
  

    Final allocation details seen by Reuters showed the five-year tranche drew more than $1.45 billion in orders, including $175 million of joint lead manager interest, from 68 accounts. U.S. investors bought 38%, European the Middle East, and Africa (EMEA) 41% and Asia 21%. Asset and fund managers took 82% of the tranche.
  

    The 10-year tranche drew more than $1.35 billion in orders, including $240 million of joint lead manager interest, from 63 accounts. U.S. investors bought 52%, EMEA 31% and Asia 17%. Asset and fund managers took 72%, while insurers and pension funds took 25%.
  
The sale was a key test of foreign investor appetite for Indonesian assets at a time when investors have worried about a sharp fall in the rupiah, President Prabowo Subianto's populist policies and Danantara's widening role in the economy.
Bank Indonesia on Tuesday raised its benchmark interest rate by 25 basis points in a rare off-cycle move, lifting it to 5.50% to help steady the rupiah after the currency hit a series of record lows.
Jakarta stocks .JKSE have slumped 30.1% year-to-date, while investors are awaiting a key MSCI review of Indonesia’s market accessibility due later this month.

    Andrew Wong, managing director of credit research at OCBC, said investors appeared focused on "the probability of implicit support given Danantara's close linkage with the government".
  
Danantara was launched by Prabowo in February 2025 and reports directly to him.
Danantara Investment Management will use the proceeds for general corporate purposes, including investments and refinancing existing debt, the term sheet showed.
Citigroup C.N, DBS DBSM.SI, HSBC HSBA.L, Mandiri Securities and Standard Chartered STAN.L were joint bookrunners and joint lead managers for the deal.

 (Reporting by Yantoultra Ngui, Rae Wee and Tom Westbrook; Editing by Himani Sarkar, Sam Holmes and Ed Davies)
 ((Yantoultra.Ngui@thomsonreuters.com;))