Indonesia’s Danantara eyes US$1 billion bond sale in test of investor appetite

[SINGAPORE] A unit of Indonesia’s sovereign wealth fund Danantara has launched its debut US dollar bond sale, which sources said could raise as much as US$1 billion, in a major test of foreign investor appetite amid growing challenges in South-east Asia’s largest economy.

Danantara Investment Management started marketing the US dollar bonds in five and 10-year tranches on Thursday (Jun 11), and is aiming to raise about US$500 million from each tranche, three sources with knowledge of the matter said.

It set the final price guidance for the bond sale at 5.35 per cent for five-year notes and 5.95 per cent for 10-year notes, according to a term sheet seen by Reuters.

That was 35 basis points tighter than the initial guidance of around 5.7 per cent for the five-year notes and about 6.3 per cent for the 10-year notes based on an earlier term sheet seen on Thursday.

Danantara did not respond to an e-mailed request by Reuters for comment.

The debt sale comes at a crucial time for Indonesia, as investors, worried about a free-falling rupiah and President Prabowo Subianto’s populist policies, cool on Indonesian assets.

Bank Indonesia on Tuesday raised the benchmark interest rate by 25 basis points in a rare off-cycle move to 5.5 per cent to try to stabilise the rupiah after the currency hit a series of record lows.

Concerns are also mounting over Danantara’s expanding mandate, with the sovereign wealth fund most recently tasked to become the sole exporter of palm oil, coal and ferroalloys from as early as September under a newly established unit.

Danantara was launched by Prabowo in ​February 2025 and reports directly to the president.

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Its final price guidance for its US dollar bonds was 35 basis points tighter than the initial guidance of around 5.7 per cent for the five-year notes and about 6.3 per cent for the 10-year notes based on an earlier term sheet seen on Thursday.

The country’s sovereign US dollar debt due in 2036 was last trading at 5.6 per cent, while state firm Pertamina’s US dollar debt due in 2031 traded at 5.27 per cent, based on LSEG data.

The pricing for the Danantara bonds is expected to be fixed later on Thursday.

Proceeds from the US dollar bond sales will be used for general corporate purposes, including investments and refinancing existing debt, according to the sovereign wealth fund’s marketing term sheet.

The bonds are set to be issued under its US$5 billion global medium-term note programme, and are expected to be rated “Baa2” by Moody’s and “BBB” by S&P and Fitch.

Citigroup, DBS, HSBC, Mandiri Securities and Standard Chartered have been hired as joint bookrunners and joint lead managers for the deal, the term sheet showed. REUTERS