(June 11): Indonesia’s sovereign wealth fund Danantara kicked off its debut global dollar bond sale, testing investor appetite at a time when confidence in Southeast Asia’s largest economy has soured.
The fund, which has emerged as a powerful new player in the nation’s economy, is seeking to sell benchmark-sized notes in a two-part offering with maturities of five and 10 years, according to people familiar with the matter who asked not to be identified discussing private matters.
The offering is getting underway after investors pulled billions of dollars from the nation’s stocks so far this year, forcing policymakers to take aggressive action this week to support the rupiah. President Prabowo Subianto’s interventionist economic agenda is increasingly unnerving investors after he announced plans last month to centralise exports of key commodities under a unit of Danantara.
Indonesian assets rebounded over the past two days after officials stepped up efforts to reassure foreign investors, driving the rupiah to its biggest gain in more than a year, while easing pressure on bonds and lifting stocks.
Fitch Ratings and Moody’s earlier this year revised their outlooks on Indonesia’s sovereign credit rating to negative, citing policy uncertainty and concerns over governance.
Danantara is also planning to issue local-currency bonds that would carry coupons below prevailing market rates, according to people familiar with the matter. The proposed sale has drawn comparisons with last year’s so-called “Patriot Bonds”, whose below-market yields generated unease among Indonesia’s wealthy business owners and tycoons.
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